Issue of Insight

Inside•Creatingvaluefromideas•Smallmodularreactors•Blowoutprevention•LNGasfuelJIP•Meetingtheskillsshortage•De-riskwithsocialmedia•KORAIL’ssafetymanagementreboot

insightAmagazinefromLloyd’sRegister Issue 1/2013

Innovation in a complex world

Inside Issue 1/2013:Contents in full:2 Innovation3 Creatingvaluefromideas5 Mininginthedeep7 Smallisbeautiful:smallmodularreactors10Innovationcombination:LNGasfuelJIP12 Blowoutprevention14Howtoattractthewinningformula:

anewhybridferry16Whatgetsmeasuredgetsmanaged:

PaulSimpson,CEOofCDP19Isnuclearsustainable?

Q&AwithDr StefanHirschberg,PaulScherrerInstitut

22Deepdown:London’sCrossrail24Disciplinedapproach:interviewwith

AndyTung,CEOofHongKong’sOOCL26 Marginaltomainstream:Howsocial

mediacanhelpde-riskyourbusiness–bydigitalstrategistNicNewman

28Greenmachines:interviewwithMonikaBomba,SocietyofMotorManufacturersandTraders

30Againsttheodds:Taiwanhigh-speedrail34TheGuru:interviewwithRaviMehrotra,

ExecutiveChairman,ForesightLimited36Tomorrow’stalent:meetingthe

skills shortage39‘Waterlite’energyforIndia?40 Rebuildingtrust:KORAIL’s

safetymanagement42Auditorcompetency:akeytofood safety44Newsupdate

InnovationTechnologicalinnovationcandriveoureconomiesforward,createjobsandbenefitsociety

2–15

16

19Is nuclear sustainable? Q&AwithDrStefanHirschberg,HeadofEnergySystemsAnalysisatthePaulScherrerInstitut

Disciplined approachAndyTung,CEOofOOCLsayslearningfrompastmistakeshashelpedthecompanytostayprofitable

24

Against the oddsTaiwan’shigh-speedrailwayhassurvivedmanyobstaclestobecomeapopularandprofitablesuccessstory

30

Lloyd’s Registerworkswithbusinessesandorganisationsaroundtheworldtoenhancethesafetyoflifeandpropertyatsea,onlandandintheair.Wehelpourclientsfacetoday’schallengesandplanfortomorrowandbeyond.

Insightisourmagazinefordecision-makersworkinginthemarine,energyandtransportationsectors.CareistakentoensurethattheinformationinInsightisaccurateanduptodate,however,weacceptnoresponsibilityforinaccuraciesinorchangestosuchinformation.TheviewsexpresseddonotnecessarilyrepresentthepositionofLloyd’sRegister.Copyright©Lloyd’sRegisterGroupLimited2013Allrightsreserved.

ThemagazineisproducedbyGroupCommunications,designedbyC o n r a n D e s i g n g r o u p

andprintedbyPureprint.

Editor:KathyDavis

[email protected]+44(0)2074232654www.lr.org

What gets measured gets managedPaulSimpson,CEOofCDPontheevolutionofcarbonreporting

EverytimeweproduceaneweditionofourInsightmagazineIamstruckbyoneoverridingthought.Thefundamentalissuesthathaveoftengovernedtheinternationalnewssincethelastissuearediscussedinthecurrentcopy.Thisoneisnodifferent.WhetheritiscontinuingcoverageofliabilityintheGulfofMexico,

permissionforanewhigh-speedraillinkorstrivingforsustainableenergysources,thismagazinehas‘insight’ontheissues.Lloyd’sRegisterisworking24hoursaday,somewhereintheworld,tryingtoensureweassistinsomeofthebiggestchallengessocietyhaseverhadtoface.

Thesechallengeswillbewithusformanyyearsbutthecomplicationisthattheeconomic,thesocial,thetechnicalandthepolitical,arebecomingincreasinglyinterlinked.CSRstatementsfocusingontheenvironmentandsocialsupportarenowbeingjoinedbyeconomicimpactreportsdemonstratingbusinesscontributiontoanation’sorglobalGDP.

Decidingwherebesttocontributetosocietyisbasedonourunderstandingoftheneeds.Knowingwhattoreadabouttheneeds,inthisworldofprintedorelectronicandsocialmedia,hastobeaplannedactivity.Theavailableoptionsaresometimesoverwhelming.HoweveryoudecidetoreadourviewsandInsight,Ihopeitincreasesyourknowledgeandinspiresnewthoughtsandinnovations.

WelcomeTo our latest issue of InsightRichard Sadler, ChiefExecutive

Innovation:

Fromthedomesticationofanimalsandplantsin9000–7500BC,tothefirstironsteamshipsinthe1820s,andtotoday’snano-technology,wehaveusedtechnologicalinnovationtodriveoureconomiesforward,createjobsandbenefitsociety.

Historically,innovationmayhavehappenedthroughchance;recentexamplesincludex-rays,superglueandthemicrowave.Nowleadingcompaniesfocusonpromotinganenvironmentthatencouragesmeaningfulinnovations.Thisisseenasacrucialwaytosurviveanddrivetheirmarketleadership.Givenitsbenefitstosocietyandtheeconomy,policymakersalsoaimtodevelopconditionsthatwillfosterinnovation.

Innovationisnotjustaboutideas,itisthesuccessfulimplementationofideasthatleadtomorevalue.Butwhataretheessentialingredientsforinnovation?Whatarethebestbusinessmodels?Howdowegeneratethebreakthrough

technologiesthatpushforwardourlives,oursociety,ourculture?Inthisissuewelookatsomeofthesequestionsandexamplesofinnovationacrosstheenergy,transportandmanagementsystemssectors,andeveninthewaywecommunicate–theriseofsocialmedia.

Thepopulationoftheworldisnowmorethansevenbillionandisforecasttoreacharoundninebillionby2050.Asanabsoluteminimum,thesepeoplewillneedfoodandwater.Theywillalsoneedsomewheretolive.Moreofthemarelivingincities–twomoreeverysecond,accordingtotheUN.Theywantabetterlife:betterfood;betterclothes;moreopportunities.Theywillneedtransportandpower.

Innovation–newandimprovedtechnologies–willbecriticalinmeetingtheseneedsandtocopewiththeenvironmentalchallengesinthedecadesahead.

2 Issue1/2013Insight

Creating value from ideasIt’s vital for economic and social prosperity, but what are the keys to technical innovation? Russell Barling takes a look.

Concepts

Innovate

Ideas

Develop

For the third year in a row, in 2012, Apple was selected by a jury of its peers as the world’s most innovative company.

But,unliketheprevioustwoyears,lastyearthecompetitionwasnotevenclosewhenconsultantsBooz&Coconsolidatedtheopinionsoftheworld’stop1,000corporateresearchanddevelopment(R&D)spenders.EightypercentofrespondentshadAppleintheirtopthreemostinnovativecompanies,against43%fortherunner-up,Google.

Itwouldbeeasy–and,insomeboardrooms,comforting–toassumethatApplehasboughtthattitleeveryyearbyvirtueoftheenormouscapitalitpilesintoR&D.Anycompanywiththeirmoneywouldleadtheinnovationsweepstakes,too,right?Notnecessarily.

Appleactuallyranked53rdamongtheGlobalInnovation1,000intermsofR&Dspending,allocatingUS$2.4billion,orabout2.2%ofitsrevenuelastyear.WhileToyota,whichwasvotedseventhamongthetopinnovators,committedUS$9.9billiontoR&Dlastyear(4.2%ofrevenue),morethananyothercorporation.Intermsofthe‘intensity’ofcorporateR&Dspending(theproportionofrevenueinvestedbackintoR&D),Googlewastop,putting13.6%ofrevenuebackintoR&D.

Sowhydothetopspendersappeartounderperforminpeerrankings,letaloneintermsofmarketcapandrevenuegrowth?

Insight Issue1/20133

Hard to quantify Partofthereasonforthedisparityisthatthereisnodirectwaytomeasuretheinfluencethattheproductsofinnovationhaveoneconomicgrowth,eventhosethatchangecorporatebehaviourandpeople’slives.Thefullimpacthasanintangibleelementthatishardtomeasure.

Fortheaverageconsumer,forexample,innovativecommunicationstoolsnotonlyentertain,theycanchangehowpeopleinteract,howtheylearn,theirpublicimageandthequalityoftheirlives.

Appliedcommercially,thosebenefitsproffercompetitiveadvantages,whichinfluencethebottomline.Butnoonereallyknowsbyhowmuch.Nevertheless,publicandprivatesectorleadersdonotdisputethatinnovationboostseconomicgrowthandprofitability.

“Innovationisbecomingthespearheadofcompetition–ataregionallevel,onanationallevel,andforcompanies,”BenVerwaayen,theCEOofAlcatel-LucentrecentlytoldtheauthorsofINSEAD’sGlobalInnovationIndex.“Howtodealwiththatchallengewilldeterminethedestinyofcompetitivenessforallplayers.”

Globally,economistsbelievethataboutathirdofeconomicgrowthisinfluencedbytechnologicalchange,suggestingthattechnicalinnovationiscriticaltosocialprosperity.

Shift to the east Astheforerunnersofindustrialisation,Westernnationsdominatetheglobalrankingsforinnovationperformance;theexceptionsareSingaporeandHongKong,whobothrankintheTop10,accordingtoanINSEADreport,whichrankednationaleconomiesonthebasisoftheirinnovationcapabilitiesandoutput.

Butmanycountrieswithfewerresourcesareprovingmoreeffectiveatgeneratingresults,afactthatisseeinginnovation

migrateeastwiththeglobaleconomy.Whenmeasuredintermsofinnovationefficiency–describedbytheindexas‘countrieswhicharestrongatproducingoutputdespiteweakerinnovationenvironmentsandinputs’–ChinaandIndiasatatthetopoftheladderlastyear.

China,inparticular,hasmadespectacularrecentprogressontheR&Dfront:from1991to2011theamountitspentonR&Dincreasedmorethansixtimes,to1.77%ofGDP.ItisnocoincidencetheperiodthatdefinesitsrisingR&Dcommitmentcorrectlycorrelateswithitsemergenceasaglobaleconomicsuperpower.TheplanisforitsannualR&Dexpendituretoreach2.5%ofGDP–theaverageforEUcountries–by2020.

“Atthisrate,Chinacouldsoongofrombeingtheworld’sbiggestfactorytobecomingamainlaboratoryfortheplanet,”thereport’sauthor,IMDProfessorGeorgesHaour,said.“NeverhastheworldwitnessedalargemarketemergesoquicklyasChinahas.Astheeconomygrows,itisalsochanging.Chinaisfastclimbingthevaluecurve,transitioningfromlow-costmanufacturingtoinnovation-ledgrowth.”

Clearly,whatAppleandChinaproveisthatittakesmorethancapitaltobeaninnovationleader.Thismaybebecauseitisnotenoughtosimplycreateideas;theinvestormustalsohaveaneffectivestrategyforconvertingideasintoproducts.Thesethendeliverprofitsforcompaniesorlesstangibleresults,suchasbetterhealthorqualityoflife,forthestakeholdersofpublicsectorinstitutions.

Innovation modelsThe1,000companiessurveyedbyBooz&Cowereaskedtoseparatethemselvesintothreecategories:‘needseekers’(thosewhoprioritiseengagingclientstogeneratenewideas),‘market-readers’(whomonitorthemarket,butprimarilyrelyonincrementaladvancestoexistingproducts)and‘technologydrivers’(whorelyheavilyoninternaltechnologicalcapabilitiestodevelopnewproductsandservices).

Ofthose,the‘needseekers’,includingApple,consistentlyoutperformedtheirrivalsfinancially,inpartbecausetheyhad

greaterconfidenceintheirabilitytoconvertideasintoproducts.Halfof‘needseekers’saidtheircompanieswere‘effective’atboththeidea-creationandproduct-outputstagesofinnovation;only12%of‘marketreaders’and20%of‘technologydrivers’expressedthesamesentiments.

Moreover,the25%ofrespondentswhodescribedtheircompanyas‘highlyeffective’atbothideacreationandconversionalsooutperformedtheirpeersonthreefinancialmeasures:revenuegrowth,marketcapandprofitmargins.

Ifonehadtochoosebetweenbeinggoodatideacreationorconversion,youwouldbewellcounselledtooptforthelatter.Why?Becausethesurveyfoundthattheabilitytodelivertheproductofinnovationhasagreaterinfluenceoneconomicgrowththantheabilitytocreatetheideasthemselves.

“Ifyouhaveacreativeideaanditdoesn’tcreatevalue,it’snottechnology;it’sart,”MathewGanz,Boeing’sGeneralManagerofResearchandTechnology,toldthereport’sauthors.“Ifyou’reallaboutvaluecreationwithnocreativity,theaccountantsaregoingtotakeover.Youneedtoprimethepumpwithcreativeideasandthenyouneedtohaverigorousprocessesinplacetoturnthoseideasintodollars.”

Russell BarlingisLloyd’sRegister’sGlobalMediaManager.

“ Innovation is becoming the spearhead of competition – at a regional level, on a national level, and for companies.”

“ At this rate, China could soon go from being the world’s biggest factory to becoming a main laboratory for the planet.”

Solutions


Mining in

the deepThe mysteries of the deep, a world of giant, sinister-looking creatures, undersea structures and more recently futuristic-looking submersibles and robots. Could this vast and largely unexplored territory become the ‘outer space’ of the future? asks Christopher Browne.

Itcouldwelldo–thoughnotintheglamoroussphereofspacemissions,moonlandingsandthehiddenseasonMars.No,thisisafarmorecommercialsortofventurebasedoneconomicforcesandtheneedtoreplenishtheworld’sdwindlingland-basedresources.

Knowing71%oftheworld’ssurfaceiscoveredbywater,moreandmorescientists,engineersandminingcompaniesareeyeingtheoceansandtheresourcesthatliebelowtheseabedasapotentialsourceofourfuturemineralsandoredeposits.

Sohowwouldthiswork?Whatarethetechnicalimplications?Whichareasarelikelytoholdthemostvaluabledeposits?Theanswerstotheseandmanyotherquestionshavebeenexploredinanacademicstudyonseaexploitation,SustainableSeabedMining.

Thiswasthewinningprojectinthe2012ResearchCollegiumdevisedandorganisedbyTheLloyd’sRegisterEducationalTrust(nowpartoftheLloyd’sRegisterFoundation)andtheUK’sUniversityofSouthampton.

Interestingly,apartfromthepioneeringworkoftheFrenchfilm-makerJacquesCousteauinthe1950sto1970sandthemorerecentdiscoveryofthewreckoftheTitanic,theoceanshaveneverheldusinquitethesamethrallasspace.OurexploratoryinstinctsseemtohavebeensatedbytheintrepidspaceprobesoftheRussiansandAmericansinthe1960sand1970s.Yetthepotentialisthere.Inthe1970sgeologistsdiscoveredthathugedepositsofgold,copperandzinc,amongothers,lieinseamsonetotwokilometresunderwaterandejectedontotheseafloorbyhydrothermalventsorgeysers.


Development dilemmas Theideaofdeepseaminingremainsataveryearlyandexperimentalstage.Inthetwoyearssincewinningtheleasefortheworld’sfirstcommercialdeepseaminingoperation,offthePapuaNewGuineacoast,theCanadiancontractorNautilusMineralshasfacedconsiderableoppositionfromenvironmentalistsandconservationistsworriedaboutdamagetounderwatervolcanicsitesthatshelterhundredsofpreviouslyunknownspeciesoffishandplantlife.

ThestudyteamsfoundthattheNautilusMineralsproject,scheduledtostartthisyear,islikelytohavea‘minelife’oftwo-and-a-halfyears,extractingoreatamaximum5,900tonnesaday.Butamongthespeciesmost‘atrisk’duringtheseprojectsaremarineturtlesandwhales–andthePapuaNewGuineaeconomiczoneisadesignatedwhalesanctuary.

Itisdilemmaslikethesethatthestudyaddresses,measuringtheobviouseconomicandtradebenefitsofsuchschemesagainsttheengineeringandminingcostsandtheeffectsontheenvironmentandregionalbiodiversity.

Atlantis II Deep challengeOneofthemostpromisingseabedminingsitesthestudyhighlightsisknownasAtlantisIIDeepandliesundertheRedSea.Hereanengineeringsystemwasbuiltandtestedsuccessfullyin1979.“Withincreasesinmetalpricesandadvancesintechnology,seabedmininginAtlanticIIDeepbecomestangibleinthenearfuture,”saythestudy’sauthors.Substantialdepositsofzinc,copper,lead,silverandgoldworthseveralbillionpoundslieinthis62km2area.

UsinglessonslearnedandchallengesidentifiedfromtheNautilusMineralscasestudy,andaidedbyinterviewswithexperts,theteamdevelopedanewconceptforAtlantisIIDeepbasedonasitespecificassessmenttakingintoaccounttechnological,economic,legalandenvironmentalchallenges.

Fostering researchDuringaneight-weekperiodin2012,25youngresearchscholarsfromaroundtheworldworkedinfiveteamsonthetopicofsystemsunderpinningseabedexploitation.TheCollegiumcomprisedPhDstudentsandpost-doctoralscholarsfromLloyd’sRegisterFoundationfundedCentresandotheruniversitiesaswellasasmallnumberofpeopleworkinginindustry.Theaimwastoprovideanenvironmentwhereindividualscanlearnandco-operateinsmall,mixeddisciplinegroupstodeveloptheirskillswhilecompletingaprojectthattacklesamajorglobalchallenge.

TheCollegiumandresearchCentreswereformerlyfundedbyTheLloyd’sRegisterEducationalTrust(TheLRET).On1March2013,TheLRETwasincorporatedintotheLloyd’sRegisterFoundation,acharityandtheparententityoftheLloyd’sRegistergroup.TheFoundationsupportstheadvancementofengineering-relatededucation,andfundsresearchanddevelopmentthatenhancessafetyoflifeatsea,onlandandintheair.

ThethirdResearchCollegium2013willfocusoncoastaleco-cities,supportedbytheLloyd’sRegisterFoundationagainincollaborationwiththeUniversityofSouthampton.MoredetailsabouttheCollegiumandpapersfromthe2011and2012eventscanbefoundatwww.southampton.ac.uk(searchfor‘collegium’)orwww.lrfoundation.org.uk.

TheCollegiumisoneofanumberofjointinitiativesbyLloyd’sRegisterandtheUniversityofSouthampton.Nextyear,400membersofLloyd’sRegister’sMarinebusinesswillmovetoa£120millionpurpose-builtglobaltechnologycentre(GTC)ontheuniversity’sBoldrewoodcampus.AnotherpartofthecollaborationwillbeSouthamptonMarineandMaritimeInstitute(SMMI),theUK’slargestbusiness-universityalliance,whichwillbebasednexttotheGTCandwillincludeacademics,leadingbusinessesandresearchinstitutesfromallovertheworld.

Theorecouldbegatheredbyacollectionmachinefittedwithacutterheadanddrivenbyelectricityfromthesurfaceviaa2,000metrelongcable.Theorewouldthenbethensuckeduptoanoperatingvesselbyasubseapump.Thecollectionmachinewouldbefittedwithacameraandvarioussensorsanddetectorssotheengineersonthesurfacecancontroltheunderseaminingactivitieseffectively.

Onceagain,potentialoperatorsfacedisturbingaregionofbiologicallysignificantcoralreefs,uniquemarineandcoastalareasandadiversenumberoflocalspecies.TheRedSeaalsohasitsownnetworkofmarineprotectedareas.

Acknowledgingthelimitationsofcarryingoutandpublishingtheirresearchinsixweeks,thismulti-disciplinarygroupnonetheless

presentedabodyofworkwhichcouldformthebasisoffutureindustrialandacademicinvestigation.

‘SustainableSeabedMining:GuidelinesandanewconceptforAtlantisIIDeep’byLev Egorov,PostGraduateStudent(TechnicalScience),Admiral MakarovStateUniversityofMaritimeandInlandShipping,Russia;Hany Elosta,PhDCandidate,MarineStructuresand

ReliabilityCentre,UniversityofStrathclyde,UK;Dr Nicole Kudla,ResearchFellow,Lloyd’sRegisterFoundationTransportRiskManagementCentre,ImperialCollegeLondon,UK;Shiliang Shan,PhDCandidate,DalhousieUniversity,Canada;andKyung-Kyu Yang,PhDCandidate,SeoulNationalUniversity,SouthKorea.

Christopher BrowneisLloyd’sRegister’sMarineNewsEditor.

[email protected]

“The study could form the basis of future

industrial and academic investigation”


Small is beautifulSmall modular reactors

SMRs could be used in both developed and emerging economies worldwide

Small modular reactors are fabricated in an off-site factory and then delivered to site

already fuelled for final installation, significantly reducing construction time

The development of small, factory-built nuclear reactors is being driven by a need to cut capital costs, provide power away from large distribution networks and reduce greenhouse gas emissions. Professors Richard Clegg and Mamdouh El-Shanawany look at the technologies that are becoming available, and gauge the likely take-up of these reactors.

Asnuclearpowergenerationhasbecomemoreestablished,thesizeofreactorshasgrownfromthe60MWelevelsofthe1950stotoday’s1,600MWegiants.Butdespitetheoperatingeconomiesofscalethatfollowed,highcapitalcoststwinnedwithademandforsmaller-scale,moreflexiblepowergeneration,nowseesindustryre-visitingsmallreactorsthatgeneratelessthan300MWe.

Theseso-calledsmallmodularreactors(SMRs)couldprovidepowertosmall,remoteelectricalgridsindevelopingcountriesorbeintegratedwithrenewabletechnologies,suchaswindandsolarpower,tooffsetvariationsinenergygeneration.‘Modular’referstothefactthatthereactorsarefabricatedinan

off-sitefactoryandthendeliveredtositealreadyfuelledforfinalinstallation,significantlyreducingconstructiontime.

Thelatestdesignsalsobuildonthesafetyfeaturesandemergencyresponsesassociatedwithlarge-scalenuclearpowerplants.Butthefactthattheyaresmalleranduselessfuelenhancestheircoolability,andreducesthelikelihoodofcoredamageinunplannedevents.

Why now?Theoperatingeconomiesofscalethatcamewithtraditionallargenuclearplantsarenowover-shadowedbythemassivecapitalcostsofbuildingalargeplantfromscratch.Theindustrytrendtowardssmaller-scale,moreflexiblepowergeneration,suchaswindandsolarenergy,hasledtoarevivalofinterestinthesecaravan-sizedunits,withanumberofmanufacturerslookingtobuildprototypes.

Theycouldsuitcountriesthatlacktherobustelectricalnetworkneededtotransmitthemassiveoutputgeneratedfromconventionallargenuclearpowerplant,andthetechnologycouldalsoofferacheaperalternativetodieselgenerationusedinremoteregions.

ThreedistinctSMRreactordesignsarecurrentlybeingconsidered,basedonlightwater,fastneutronreactionandhigh-temperaturegas-cooledtechnologies.Whileeachhasitsprosandcons,thedesignsaregenerallysimplerandwillbecheapertomassproduceandsitethanlargerversions.Mostaredesignedwithahighlevelofso-calledpassivesafety,notrequiringoperatoractionsorelectronicfeedbacktoshutdownsafelyinanemergency.Inaddition,theAmericanNuclearSocietyrecentlyreportedthatmanyofthesafetyfeaturesrequiredonlargereactorsarenotnecessaryinthesesmalldesigns.

TheUSislargelyfocusingonsmall,lightwaterreactors,thankstoitslargepoolofindustrialexperiencewiththistechnology.Thereactordesignisbasicallyascaled-downversion–lessthan200MWe–ofexistingUSplant.Thisislikelytohelpdevelopmentand,importantly,speeduplicensingapplicationsintheUS.Thefirstdemonstrationreactorscouldbeupandrunningby2018.

Russia,Argentina,France,SouthKorea,China,JapanandSouthAfricaarealso


SMRs could be integrated with renewable technologies, such as wind and solar power, to offset variations in energy generation

Small, remote electrical grids in developing countries could

be powered by SMRs

workingonSMRsbasedonexistinglightwaterreactordesigns.TheUKhasexpertiseandexperienceinSMRsandcouldalsodevelopasadesignerandmanufacturer.

Better use of fuelResearchersintheUS,KoreaandRussiaareworkingonfastneutronreactors,thatpromisetobesmallerandsimplerthanlightwatertypes.Thesereactorstypicallyuseliquidmetalsasacoolantinsteadofwater,allowingso-calledfastneutronsofhigherenergiestodrivefissioninthereactor.

Assuch,thesereactorsusethefullenergypotentialofthenuclearfuel,ratherthanthe1%consumedbylightwaterreactors.Becausethereactorsconsumethetransuranicelementsinthefuel,theradioactivelifetimeofwasteissignificantlyreducedandthere-fuellingintervalextendedtoasmuchas20years.Thereactors,however,alsodemandafast-reactingsafetysystem,andcannotrelyonpassivesafetyfeaturesalone.

Perhapsthemosthighprofilefastneutronreactorisa70MWt/25MWeunitfromUS-basedGen4Energy.Theportable,

sealedreactorwillmeasureonly1.5metreswideand2.5metreshigh,containnomovingpartsandcouldoperateforuptoadecadewithoutre-fuelling.Aprototypeiscurrentlybeingbuilt.

Meanwhile,USenergygiantGeneralElectricandJapaneseconglomerateHitachihavejoinedforcestoconstructafastreactor–thePowerReactorInnovativeSmallModule(PRISM)–thatcanactuallygenerateelectricityfromspentnuclearfuel.Asthisprojecthighlights,around95%ofthespentnuclearfuelfromconventionallightwaterreactorscouldbeusedtogenerateelectricity.GEHitachihaslaidoutplanstobuildareactorrecyclingplantintheUS.ThealliancehasalsoconfirmedtalkswiththeUKgovernmenttousethetechnologyasawayofdealingwithBritain’scivilplutoniumstockpile.

ThethirdSMRdesign-typeisbasedontheconceptofahigh-temperaturegas-cooledreactor.Classedasa‘GenerationIV’reactor–andyettobebuilt–thesereactorshaveveryhighoutlettemperaturesandaresuitableforapplicationssuchasgeneratingprocessheatforindustrialapplicationsorproducingnuclear-assistedhydrogenforfuellingthehydrogeneconomy.

TheChineseenergyfirm,Chinergy,ispioneeringoneofthemostadvancedhigh-temperaturegas-cooledSMRprojectstodate,andhassubmittedplanstobuild18reactorsof210MWe,equippedwithpassivesafetysystems.

Quicker turnaroundsAcommonadvantageofSMRsisthattheycanbebuiltrelativelycheaply,incleanconditions,inafactoryenvironment.A2011reportfromtheUniversityofChicagoEnergyPolicyInstituteconcludedthatthesereactorscouldcompeteeffectivelywithalternativeenergysources.

US-basedGen4EnergyestimatesoneofitsreactorswouldcostUS$100milliontobuildcomparedtotheUS$4-6billionneededforalargerconventionalplant.Onceitwasmanufactured,itwouldbemovedtositeforfinalassemblybytruckortrain,andtheninstalledbelowground.Thefuelwouldalreadybesealedinsidetheunit,soonceinplacethereactorcouldbepluggedintothelocalelectricitynetworktogeneratepower.Attheendofitslifetime,theentirereactorwouldbeshippedbacktothefactoryoraregionalfuelcentre,removingtheneedtostorespentfuelseparately.


In the electric power industry, megawatt electrical (MWe) is a term that refers to electric power, while megawatt thermal or thermal megawatt (MWt) refers to thermal power produced.

SMRs can also be coupled to desalination plants to produce fresh

water for agriculture and domestic use

ProfessorRichardCleggistheGlobalNuclearDirectorforLloyd’sRegister.Hehasworkedinthenuclearindustryforalmost30years,inbusiness,academiaandgovernment.BeforejoiningLloyd’sRegister,ProfessorCleggwastheMDoftheUKNationalNuclearCentreofExcellence,andbeforethatChiefScientistattheUKAtomicWeaponsEstablishment.

ProfessorMamdouhEl-Shanawany,isLloydsRegister’sNuclearTechnicalDirector,andjoinedtheorganisationfromtheInternationalAtomicEnergyAgencywherehewasheadoftheSafetyAssessmentSection.HewasamemberoftheIAEAteamawardedthe2005NobelPrizeforPeaceandisalsoavisitingprofessorofNuclearEngineeringatImperialCollege,London.

Thiseaseoftransportandaccessibilitydoesraiseconcernswithsomegroups,includingGreenpeaceInternational,aboutsecurityandproliferationissues.

Inresponse,Gen4Energyarguesthatitssmallreactorwouldactuallyhelptopreventnuclearproliferation,asthecompanywouldremotelymonitorreactorcorestopreventattemptstodivertnuclearmaterials,andhandletheentirefuelcycleincludingmanagementoftheirradiatedfuel.

Suchalease-backbusinessmodelcouldbewelcomed,forexample,bydevelopingcountriesthatwishtoacquirepeacefulnuclearenergybutforwhichitwouldnotmakeeconomicsensetoinvestinthesurroundingfuelcycleinfrastructure.

Beyond supplyButotherkeyapplicationsexistforSMRs.Forexample,thereactorscanalsogeneratesteamforheatingortodriveindustrialprocessesinwhichlarge,traditionalreactorswouldbetooexpensiveandinflexible.

Indeed,foursmall62MWtunitsarealreadyoperatingintheSiberianArcticproducingsteamforadistrictheatingscheme.Asimilarset-upcouldprovideheatandelectricityforenergyintensiveoperationssuchasoilshalerecovery.

SMRscanalsobecoupledtodesalinationplants(astheChinergyreactorsare)toproducefreshwaterforagricultureanddomesticuse.Whilemorethan12,500desalinationplantsexistworldwide,theseenergy-intensiveprocessesaremostlydrivenbyfossilfuels.

WhileSMRsofferhugepotentialtoindustryandgovernmentsworldwidetomeetgrowingenergyneeds,therearedesigncertificationandlicensingconsiderations.Theirsmallsize,transportability,sitingandnovelapplicationsraiseparticularchallenges.Thisiswhylightwater-basedSMRs,whicharesimilartotheexistingandthoroughly-testedtraditionallightwaterreactors,arelikelytobedeployedfirst.

TheUSElectricPowerResearchInstituterecentlyestimatedthattheUShasthepotentialtogenerate201GWfromSMRs,whiletheInternationalAtomicEnergyAgencyforecasttheSMRmarketcouldbeworthUS$250billionby2050withupto1,000unitsbuilt.

Iftheyaretakenuponthisscalethentherewillbeaneedforinternationalco-operationandsupervisiontoensurethattheset-upanddisposalofthenuclearsystemsarecarriedoutinacontrolledandsafeway.

Butitseemsthefuturelooksbrightforsmallmodularreactors.

E [email protected]


Innovation combination

A joint investment project has moved the bulk carrier industry far beyond the concept stage for gas powered ships.

The first design for a deep sea dry bulk cargo vessel powered by liquefied natural gas (LNG) is the result of a COSCO Shipyard Group, Golden Union and Lloyd’s Register joint investment project. “Wehavemovedtheindustryfarbeyondtheconceptstage,”saysNickBrown,Lloyd’sRegister’sAreaGeneralManagerandMarineManager,GreaterChina.“Wehaveaddressedthetechnologyissues;attheendof2012weissuedanapprovalinprinciple(AIP)fortheproductoftheproject–anewgasfuelledbulkcarrierdesignchristened‘CleanSky’.A‘CleanSky’shipcouldbebuiltnextyear.”

Fast track innovationAtanytimeLloyd’sRegisterhasdozensofjointinvestmentprojectsunderway.JIPsprovidearapidroutetoinnovation.“ThebestJIPsareonesinwhichshipyard,designer,ownerandclassallworktogethertoachieveamutualgoalofdevelopinga‘marketdriven’design,thatisfutureproofedasfaraspossible,andattractivetoownersduetoitsoperationalefficiencyandflexibility.Whennewtechnologyisinvolved,asinthiscase,itisalsoveryimportantthatthetechnologyproviders,suchasenginemakers,areinvolvedattheearlieststage,”saysBrown.

“Ifallpartiesworktogethertheownersgainaccesstoadesignthatmeetstheirexpectationsandtheyardareabletoofferadesignthatsuitsthemarket.Thetechnologyprovidergainsearlyentryintothemarketandclassisabletoensureallpartiesare

awareofrules,regulationsandcodesthatneedtobeappliedtothedesignattheearlieststage.”

A new designOnthisJIP,inJune2011thethreepartiesagreedtoinvestigatethepotentialtodevelopacommerciallyviablebulkcarrierdesigncapableofburningLNGasfuel.ThedevelopmentteambasedtheirworkonthewellprovenconventionalCOSCOdesigned81,000dwtKamsarmaxbulkcarrier.Thisthenwasre-engineeredtoemployLNGpoweredpropulsionsystems.TheAIPcomesafterexhaustiveriskinvestigationsintothegascontainment,bunkeringsystemsandperformanceassessment.

ThesafetyofthecontainmentsystemsfortheLNGfuelwascritical.Variouscontainmentsystemsandconfigurationswereconsideredbytheprojectteam,butthefinalchoicewasforasingle,1,160m3type‘C’tankthatsitsaftontheportside.Lloyd’sRegister’sriskmethodologyfornoveltechnologyprocessprovidedapathwaythroughthecomplexityofthetechnicalriskassessmentrequired.

Flexibility is importantThe‘CleanSky’designbuildsinflexibilitybyenablingownerstochoosedualortri-fuelengines,abletoburnheavyfueloil(HFO)ordiesel,aswellasLNG.Thereisuncertaintyaboutthefuturerelativepricingoftheconventionalfueloils,thatdominatetoday,andLNG.Thisflexibilityhelpsensurethatownersof‘CleanSky’typeshavefueloptions.Althoughformanytheattractionofcleangaswilloutweighthemorecomplexscrubberoptionneededtoenableconventionalfueloilstomeetemissionregulations.


Innovation combination

“ToughenvironmentalrequirementsmeanvesselswillhavetocomplywiththeInternationalMaritimeOrganisation’s(IMO)TierIIINoxregulationsby2016andthisopensupdemandfornewshippropulsionsolutionsincorporatingcosteffectivetechnologies.Thiscouldtriggerasubstantialshifttowardsnaturalgas-poweredvessels;andingasmodedualfuelenginesalreadycomplywiththeIMO’sTierIIIrequirements,”commentsleadingGreekshipoperatorGoldenUnion.“UsingLNGmaybetheidealsolutionformeetingincreasedenvironmentalperformancewithoutlosingcompetitiveness.ThisdesignofferssignificantreductionsinSOx,NOxandparticulateemissions–aswellasCO2–bysimplyusingcleanerLNGinsteadofemployingcostlyandcomplexcleaningsystemswhichdonotalwayswork.

“LookingatthecommercialperspectiveofLNGasaship’sfuel,thecapitalexpenseofinstallinganLNGfuelsystemshouldbepaidoffafterafewyearsbyoperatingexpensesavings,especiallyifavesselistradingwithinemissioncontrolareas.GlobalreservesinLNGgreatlysurpassoilreserves.LNGisbecomingmorereadilyavailableinthemarket.This,incombinationwithsteadydemand,shouldreducepricevolatilityincomparisonwithHFO.Keepingthisinmind,HFOandmarinedieselandmarinegasoilpriceswillbelikelytoincreasefasterthanLNGrates,speedingupthepay-offofthesystem.”

Paving the way“COSCOShipyardGrouphasastrongsenseofsocialresponsibility.WeareinnovatingtohelpshipownersmeetnewIMOemissions

andperformancerequirements,”saysZhanShuMing,COSCOShipyardGroup’sHeadofEngineering.“OurdevelopmentinLNGasanalternativefueltechnologywillnotbelimitedtotheapplicationtobulkcarrierdesigns,butalsoforothershiptypes.ThecurrentachievementisonlythebeginningofourresearchanddevelopmentforLNGasanalternativefuelandtheCOSCOShipyardGroup,asapioneerinthisnewtechnology,iscommittedtoevenmorein-depthresearchinthefuture.”

MostLNG-as-fuelresearch,technologydevelopmentandnewbuildingactivitieshavefocusedonspecificnichesectorssuchasferries,offshorevesselsandshortsea,orinland,trades.Thisprojectpavesthewayfortake-upindeepseabulkcarriertrades–andtankers.

“Thechallengesaresimilarfortankers,”Brownsaid.“Clearlytherearebenefitswithusingcleangastechnology.Thekeyissuesnowarecommercial.”

TheLNGstoragetankislocatedaftonthe‘CleanSky’Kamsarmaxbulkcarrier.AKamsarmaxisabulkcarrierofaround80,000deadweighttonnes(dwt)designedtomeetberthrestrictionsattheportofKamsarinGuinea,requiringmaximumshiplengthoverallof229metres,whilemaximisingcargocapacity.


Blowout prevention

BetweenAprilandJuly2010,anestimated4.9millionbarrelsofcrudeoilgushedfromthedamagedMacondowellintotheGulfofMexicofollowingtheexplosionthatkilled11workersanddestroyedtheDeepwater Horizondrillingrig.

Thiswas,accordingtoPresidentObama,theworstenvironmentaldisasterAmericahadeverfaced.

Bythetimetheleakwasstopped,oilhadaffectedmorethan1,000milesofcoastinfiveUSstates,seriouslydamaginglocalfishingandtouristindustries–aswellasthereputationoftheoffshoreoilandgassector.

Somethinghadtobedonetomakesureitneverhappenedagain.

AnewUSgovernmentdepartment–theBureauofSafetyandEnvironmentalEnforcement(BSEE)–wassetup,whichhasimplementedthemostaggressiveandcomprehensiveoffshoreoilandgasregulatoryreformsinAmericanhistory.

Spotlight on BOPThedisasterwastheresultofablowout,and‘theblowoutwastheproductofhumanerror,engineeringmistakes,andmanagementfailures’,accordingtotheofficialreportoftheUSgovernment’sOilSpillCommission.Thisputthespotlightonthefailureofthewell’sblowoutpreventer(BOP).

ABOPisalarge,specialisedvalveusedtoseal,controlandmonitoranoilorgaswell.Itcanbethesizeofadouble-deckerbus

and,inthecaseoftheMacondoBOP,weighupto400tonnes.Itistheretopreventtheuncontrolledreleaseofoilorgasandiscriticaltothesafetyofthecrew,therigandtheenvironment.Itisthefinallineofdefence.

BOPfailuresareuncommon,butfarfromunknown:therehavebeenafewmajorincidentssincetheDeepwater Horizon.Failurescanbeelectrical,hydraulicormechanical.Butwhateverthecause,failureinsuchacomplexsystem,controlling500,000–750,000poundsoframforceinwaterthatmightexceed9,000feetdeep,canposeacatastrophicriskoffire,explosionanddeath.

WhenaproblemisdetectedinaBOPsystemorcomponent,adecisionhastobemadewhethertopulltheBOPtothesurfaceforinspection–ornot.Suchdecisionsaremadeonthebasisofsomeunderstandingofwhattheproblemmightbeandariskassessmentofthepotentialseriousnessofthefault.

Butsuchdecisionscanalsohavesignificantcostimplications.AccordingtoDucodeHaan,CEOofLloyd’sRegisterEnergy–Drilling:“TheoperationalcostofdrillingadeepwaterwelltypicallyrangesfromUS$1milliontoUS$1.2millionaday.Insomeoftheultra-deepwaterprojects,itcouldtake8–12days–orevenlonger–tosecurethewell,recoverandrepairtheBOP,re-runandthenre-testitbeforeresumingoperations.So,oneincidentcouldcostUS$14million.”TheannualcosttotheindustryofpullingupBOPsrunsintomanyhundredsofmillionsofdollars.

The response to the Deepwater Horizon disaster has spurred an innovative solution, reports Jason Knights.


However,mostriskassessmentscurrentlyusedintheindustrydonotemployauniformprocess,meaningthat‘pull’or‘nopull’decisionsarenotbeingmadeonaconsistentbasis.Thehumanfactorisalsosignificant.Itcanresultindecisionsthataresubjectiveandnon-transparent,whicharedifficultforseniormanagementtounderstandandunacceptabletoregulatory bodies.

OneofthekeyrecommendationsoftheOilSpillCommission’sreportwasthattheUSshouldintroduce‘a‘risk-based’regulatoryapproach’similartothatwhich‘haslong-sincebeenadoptedinbothNorwayandtheUnitedKingdom’.

Asaresultofthesubsequentregulatorychanges,therewasaclearindustryneedforaBOPfailure-decisionmodelwhichcoulddetailchangesinoperationalriskquicklyand confidently,thatremovedsubjectivityandthatwasverifiable.

Innovative responseFollowingdiscussionswithownersandoperatorsinthesector,Lloyd’sRegistergroupmembersModuSpecandScandpowerbeganworkondevelopingsuchamodel.ModuSpechasextensiveexperienceintheindustry,havingevaluated80%oftheworld’soffshoreoilandgasdrillingunits;whileScandpower’sRiskSpectrumsoftwareisusedin50%ofthe world’snuclearpowerplantstohelpthemoperatesafely.

TheBOPRiskModeltheycreatedisan innovativenewapplicationfortheScandpowersoftware.Andnowwiththe expertiseofLloyd’sRegisteracquisitionWESTEngineeringServices,theleadingdrillingindustryBOPspecialist,itcanbetakentothenextlevel.

Scandpower’sVicePresidentBusinessDevelopment,IngeAlmeexplains:“Thereare manysimilaritiesbetweenthefail-saferequirementsofaBOPandthoseofthesafetysystemsinanuclearplant.Inordertoensurethattheyworkwhentheyareneeded,thereisahighdegreeoffunctionalredundancybuiltintothesesystems.Safetyfeaturesareduplicatedinordertoreducetheconsequencesofsinglefailures.

“ThesoftwaremodelstheperformanceoftheBOP.Ifeverythingisworkingasit

should,allon-screenindicatorsshowgreen.Indicatorscanmovetoamberorreddependingonthesignificanceofanyproblemthatisdetectedandenteredintothemodel.RedundancywithinBOPsmeansthattheyhaveparallelfunctionsdoingthesamething.TheriskmodelcansuggestwhetheraprobleminonecomponentorsubsystemwarrantsadecisiontopulltheBOP,orwhethertheback-upfunctionsaresufficienttoallowtherigtocontinueoperating.”

All‘pull’or‘nopull’decisionsareultimatelymadebyahumanoperator.“But,”Almesays,“whatthemodeldoesistoprovidebetterdecisionsupport–consistentfactualinformation–uponwhichthosedecisionscanbebased.”

Italsoimprovesaudittraceabilityandregulatorycompliance,anddecisionscanbesupportedbyevidence-basedexplanations.

“Theriskmodelcanandwillreducenon-productivetimedramatically,”saysDucodeHaan“whichwillsavemoney.Butit alsogiveseveryoneinvolvedanunbiasedassessmentoftheriskquickly,baseduponregulationsandspecifications,removingthepotentialinfluenceofcostonthe‘pull’/’nopull’decision.”

ThemodelisnowinuseintheGulfofMexico.Ina12-monthperiod,ModuSpec–actingasanindependentthird-party–recommendedthecontinuationofoperationson29occasionswhen,followingthedetectionofpotentialfailures,theregulatorwouldotherwisehaveforcedtheoperatortopulltheirBOPstothesurface.

Bypreventingnon-productivetime,thissavedoperatorsmorethanUS$200millioninlost revenue–andithelpsprotectlivesandthe environment.

Lloyd’sRegisterEnergy–DrillingisLloyd’sRegister’sriginspectionbusiness.IthasbeenformedfromarecentmergerofLloyd’sRegistergroupmembers,WESTEngineeringServicesandtheModuSpecGroup.

Jason KnightsisGlobalCommunicationsManagerforLloyd’sRegister’sEnergybusiness.

[email protected] me@jasonknights_LR

As a result of the subsequent

regulatory changes, there was a

clear industry need for an

effective BOP failure-decision

model


How to attract the winning formula

An innovative hybrid ferry scheme in Scotland provides benefits for the wider economy, finds Christopher Browne.

© Courtesy of Roy Paterson


Thetwohybridferrieswillcarryupto150passengersand23carsortwoHGVs.OperatedbyScotland’sCalMacFerries,theywillbeusedonanetworkofshortcrossingroutesaroundmanyoftheScottishislands.Usingthelatestgreentechnology,theywillbepoweredbysmalldieselgeneratorsetsthatfeedpowertoa400voltswitchboardsupplyingpowertoelectricmotorstodrivetheships’propellers.Theferrieswillchargeovernightwhileberthed,drawingpowerduringoff-peakhours.

“Local business benefits from the increased

employment and such projects bring more people

to the local area which means that not only is the

money made here but more importantly spent here too”

What are the magic ingredients that can turn an everyday project into a great one? A wise economist would undoubtedly say money, an element of luck and sheer hard work.Butthereareother,lessobviousfactorsthatcangiveschemesthewinningformula.Anythingtodowithgreentechnologyandtheenvironment,aconceptmuchlovedbyecologistsandentrepreneursalike,willalwayshelptoenticeaninvestororpotentialcontractor.AndtheninnovationcangiveformtoyourconceptandhelpyouachievethemuchneededXfactor.

Onesuchrecession-defyingprojectthatisnownearingfruitionontheRiverClydeinthePortofGlasgowisahybridferryscheme.Fortwoyearsalocalfirm,FergusonShipbuilders,hasbeenworkingonthesiteofthishistoricshipbuildingport,tobuildtheworld’sfirstseagoingpassengerro-rosdrivenbydieselandbatterypower.

Forefront of technologyTheSmallFerriesProject,asitisknown,isapartnershipbetweenGlasgow’sCaledonianMaritimeAssetsLtd(CMAL),foundedfouryearsago,andFergusonwithtechnicalsupportfromtwoScottishcompanies,Tec-SourceandSeatec.FundingwasraisedfromtheScottishandIrishgovernmentswithagrantfromtheEuropeanRegionalDevelopmentFund.

LaunchedinDecember2012,thefirstoftwovessels,Hallaig,isnamedafterapoembySorleyMaclean.ThenamesofitshybridsuccessorsinthefleetwillalsobedrawnfromScottishliterature.Launchingthevessel,Scotland’sDeputyFirstMinister,NicolaSturgeon,said:“It has beenoverfiveyearssincethelastcommercialshipwasfullybuiltanddeliveredontheClyde,andthelaunchtodayofthefirstof twonewcutting-edgevesselssymboliseseverythingthattheScottishgovernmentisstrivingtoachieve.”

Theprojecthasattractedmorethan200shipbuildersandengineeringsupportstafftothePortofGlasgowand,asDavidHenderson,Lloyd’sRegister’sSeniorSurveyorontheproject,says:“ProjectsliketheseputClydeshipbuildingbackattheforefrontoftechnologyandgeneratemassiveinterestwhichhelpsshowcasetheinnovation,expertiseandcraftsmanshipcapabilitiesofScotlandandtheUK.”

Employees today and tomorrowAndrewFlockhart,CMAL’sHeadofBusinessDevelopment,says:“Innovativecompaniesareabletoattractandretainemployeesby providingaworkculturethatallowsadegreeofrisk-takingandencouragesinnovativethinking,aswellasbeingpreparedtoofferacompetitiveremunerationpackage.Wehavehelpedcreateinternaljobsbyattractingadditionalprojectsbybeingrecognisedasinnovative.Oursuppliers,thatisshipyards,haveprobablybenefitedmorefromourinnovationhowever,astheyemployadditionalshipbuildersandapprenticesthroughthenewbuildprojectsthatwecommission.”

“Theallureoflifeasanengineershouldstartatschool,”saysHenderson.“Ithinkweneedtomakeengineeringandsciencesexcitingandappealingtothenextgenerationduringtheirearlyschooldayswiththecorrectbalanceoftheoryandpractical.TheYoungEngineersprojectsinScottishcollegesarestillgoingstrong,soclearlywearetryingtoencouragekidsbackintothesector.

“TheScottishgovernment’sfocusongreenenergies–anditstargetof30%ofallenergyneedsfromrenewablesourcesby2030–offersyoungengineersagreatenvironmenttocontributetoandtohelpachievesuchachallengingtarget.Whatprofessionalengineerdoesn’twanttolookbackontheircareerandsay‘Ididthat’?”

Wider benefitsApartfromattractingjobsandkudos,thehybridferryproject’sgreeneffecthashadanimpactonthelocaleconomytoo,.

“Localbusinessbenefitsfromtheincreasedemploymentandsuchprojectsbringmore

peopletothelocalareawhichmeansthatnotonlyisthemoneymadeherebutmoreimportantlyspentheretoo,”saysHenderson.“Ireallyhopethisprojectactsasacatalystforfutureinvestment.”

“DuetothewayinwhichCMALreceivesitsfunding(fromtheScottishgovernment),”saysFlockhart,“itisimportantthatwedemonstratehowweimpactontheGovernmentStrategicPriorityofmovingtowardsalowcarboneconomyaswellassupportingsocialandeconomicdevelopment.Itwouldbefarhardertoattractfinancialsupportifwedidn’tdemonstrateanddeliverthis.”

TheSmallFerriesProjectmayhelpstimulatefutureengineeringjobs.SaysFlockhart:“Thehybridferryhasattractedagreatdealofinterestandasaresulthasgeneratedanumberofspin-offprojectssuchasdevelopingasemi-automatedchargingsystemfortheferrieswhichiscurrentlybeingdeveloped.”

SothemagicingredientsseemtohavecometogetherandwhattheClydedoestodaymightprovideatemplateforsuccesselsewhere.

Christopher BrowneisLloyd’sRegister’sMarineNewsEditor.

[email protected]


Companiesthatmeasuretheirenvironmentalriskarebetterabletomanageitstrategically.Andthosethataretransparentanddisclosethisinformationareprovidingdecisionmakerswithaccesstoacriticalsourceofglobaldatathatdeliverstheevidenceandinsightrequiredtodriveaction.InarecentinterviewwithInsight,PaulSimpson,CEOofCDPspokeaboutthestridesthatCDPhastakensinceitsinceptionsome10yearsago,andtheimportantrolethatreportingplaysinclimatemitigationstrategies.

Alex Briggs Sinceitslaunch,CDPappearstohavebeenonanincrediblejourneyandnowworkswith722institutionalinvestors,holdingUS$87trillioninassets,tohelprevealtheriskintheirinvestmentportfolios.Whatsortofinnovativeinitiativeshaveyou usedtodriveCDPforwardoverthepast10yearstodelivera returnonthisinvestment?

Paul Simpson WestartedCDPin2001becauseintalkingtoinvestorsabouttheforthcomingrisksandopportunitiesclimatechangewouldpresenttotheirinvestments,thecommonmessageweheardwasthat‘wedonothaveenoughinformationtoassesstheserisksandopportunities’.SowhenwesetupCDPitwastogatherthisinformationforinvestors–specificallyfocusedonthe500largestcompaniesintheworld.Ofcourse,10yearslateralothaschanged.Wehavemovednowtothe5,000largestcompaniesintheworldbecauseourinvestorshavesaidtous‘wedon’tjustwantthisinformationonthelargestcompanies,weneedwider

coverageofourportfolios’.Asaresult,apushisunderwayto movetogreatercoverageofemergingmarketstoincludeChina, India,BrazilandSouthAfrica.CDPseesthattherearesignificantgrowthtrendsinthosemarkets,withincreasinglevelsof investmentbothincountryandfromtheinternationalmarketsinto thosecountries.Sothemovetobeingtrulyglobalhasbeena big change.

Intheearlydayswewerecollectingdataforthefirsttimesowedidnotreallyknowwhatwe’dhave,howwecouldturnthatdataintoinformation,knowledgeandwisdomtoinformbusinessandinvestmentdecisions.Overtime,westartedtousethedataindifferentways–particularlythroughscoring,wherewescorecompaniesonthequalityandcompletenessoftheirdisclosure.Today,scoringhasevolvedfurtherandnotonlyrelatestohowwell companiesareprovidingtheinformationtheirinvestorshaveaskedfor,butalsoontheirclimateperformanceincludingtheirgreenhousegas(GHG)emissionreductionstrategies.

Beyondthat,wemovedfromjustfocusingoncarbonemissionsandclimaterisktoincludewater.Inaddition,weareintheprocessofmergingintoCDPanorganisationcalledtheForestFootprintDisclosureProject,soCDPnowlooksatclimate,waterandforests.Thisapproachfitswiththetrendweseewhereclimatechangehasbeenacatalystforcompaniestopayattentiontowiderenvironmentalissuesandriskmanagement.

measuredgets managed

What gets

For over a decade CDP has worked with companies to catalyse action towards a more sustainable world, as Paul Simpson, CEO of CDP tells Alex Briggs.


“What we have seen is that companies – particularly the large multinational ones – have started to evolve and innovate in the way they approach sustainability”


AB What’sthelinkbetweenCDP,innovationandthewaycompaniesareevaluatingtheirimpactontheenvironment?

PS OneofthethingswearedoingatCDPislearningfromthecompaniesweworkwithandwhoreportonclimatechangeandwater.Whatwehaveseenisthatthosecompanies–particularlythelargemultinationalones–havestartedtoevolveandinnovateinthewaytheyapproachsustainability.Ithasbecomemoreintegraltotheirbusinessstrategy.

ThishasalsoledtochangesandinnovationatCDP.Wehaveourowninnovationpipelineprocessnow.Asasmall,nimbleorganisationwefoundthatourcolleagueswerecomingupwithsomanynewideasthatwecreatedaspecificinnovationprocesstoeffectivelymanagethoseanddevelopthegoodones.Someofthatinnovationhasbeen reflectedinthewayweaskquestions.Westartedoutwithjust sevensimplequestions,andwelearnedfromtheinvestorsandthereportingcompaniesthatwecouldoftengetbetterinformationif weaskedthequestiondifferently.

AB Whatchangesinapproacharecompaniestakingtowardsverificationandwhatbenefitscanbedeliveredtostakeholders?

PS Afterwehadbeengoingthroughthereportingprocessforthreeorfouryears,westartedtobuildawealthofinformationandweaskedhowitcouldbeimproved.Oneofthekeythingsthatcamebackwasthatinvestors,companiesandgovernmentssaid‘wewantcommonstandards’;‘wewantcomparabledatathatwecantrust’.

Weinvestigatedhowwecouldgetthestandardstobeusedinacommonwaytodrivetrustintheinformation.Asaresult,we–alongwithourverificationpartners–developedourownverificationstrategy.Inourscoringsystemswestartedtoincreasethescoresforverificationsoweknewwecoulddrivethechange.Infact,in2012wesawanincreaseof36%inthenumberofglobal500companieshavingtheirGHGemissionsdataindependentlythirdpartyverified.Soverificationhasbecomeaveryimportantpartofdrivingtrusted,comparabledata.

Wehaveseenthatcompaniesarealsoplacingagreaterfocusonimprovingtheirdataquality.Asanexample,somecompaniesmayhavesaidfiveyearsagothattheirinformationmightbe+/-20%correctbutasthefocusonthisinformationhasbecomemoreintenseandtheassociationwithbusinessvaluemoreimportant,peoplehavesaid‘ourlegaldepartmentwantstomakesurethisisaccurateinformationjustlikeourfinancialinformation’.

Sothat’sdrivenverificationfromwithinthebusinessandit’stheinvestorswhohavebeensaying‘wewanttoseethisinformationreportedandverifiedsothatwecantrustitanduseittomakeinvestmentdecisions’.

Overthelastthreetofiveyears,wehaveseenarealtrendofmajorcompanieswhostartwithmonitoringandthensay‘thenextstepistohavethisinformationverifiedsothatourstakeholderswilltrustitandweknowitistherightinformation’.

AB Inyouropinion,whatisthesinglebiggestimpactthatthe CDP has madeoverthepast12years?

PS Whenwestarted,wecouldonlyfindfewerthan10companieswhoweremonitoringandpubliclyreportingtheirGHGemissions.Todaythereareover4,100globalcorporationsreportingtoCDP,56%ofthemarketcapitalisationofthetop30stockmarkets.So already,morethanhalftheworld’svalueismonitoringandreportingonclimatechangeandIthinkthat’sbeendrivenbyourwork,ourrequestsandofcourse,fromthataremanyotherbenefitsasweknowmeasurementleadstomanagement.Wehaveover700 investorsnowwhoarestartingtothinkabouthowtheyshouldintegratethisintotheirinvestmentdecisions.Thereisalongwaytogowiththatworkbuttheyrealiseitisanissue.

AB Sowhat’stheanswerforanorganisationtobebothsuccessful andsustainable?

PS Clearly,weareintougheconomictimesandmanybusinesseshavebeenfindingthatchallenging.Firstly,withanincreasingworldpopulationwherewehaveafiniteplanetandfiniteresources,thereisnodoubtthatresourcescarcityisbecomingabiggerissue.Andwhetherthatistheresourceofastableatmosphereortheresourceofthemineralsandmetalsavailabletobusinesses,thereisgoingtobeabigon-goingthemeaboutresourceefficiency.Whateverbusinessyouarein,youneedtofindawaytobeveryleanandefficient.Somonitoringwhatyouaredoing,checkingandadaptingyoursystemsandprocessestodriveefficiencythroughnotjustyouroperations,butalsoyoursupplychain,iscritical.Thisisreallygoingtobekeyastowhothefuturewinnersareinachangingworld.

Further,businessesneedtogetbetterattheircommunications.Theyneedtogetbetteratsaying‘wecandifferentiateourselvesfromourcompetitorsbecausewearebetteronclimatechange,weareproducingcleanerwaterthanthem,ourproductsaremoreefficientandaregoingtosaveconsumersmoney’.Samsungsaysa1%reductionintheirbrandvaluebecauseofnegativeclimatechangeperceptionsfromtheircustomersisworthUS$200milliontothebusiness.SoIthinkthatreallyclarifiesthatpoint.

Alex BriggsisSeniorMarketingCommunicationsManager,Lloyd’sRegisterQualityAssurance.

[email protected] us@LRQA_CC_CSRCDPisthenewnameoftheCarbonDisclosureProject.LRQAisaverificationpartnerofCDPwww.cdproject.net

Samsung says a 1% reduction in their brand value because of

negative climate change perceptions from their customers is worth US$200 million to the business


Japan’s 2011 Fukushima Daiichi nuclear disaster has prompted a rethink of nuclear energy policy in many countries. Germany decided

to close all of its reactors by 2022. Italy has banned nuclear power. And the International Energy Agency has halved its estimate of

additional nuclear generating capacity to be built by 2035.

IS NuCLEAR SuSTAINABLE?[ ]


In 1996, 18% of the world’s electricity was supplied by nuclear power. Last year it was down to 13%

In 1996, 18% of the world’s electricity was supplied by nuclear power. Last year it was down to 13%. But this shift could add a billion tonnes of greenhouse gas emissions by 2020 if nuclear power is replaced by increased use of fossil fuels.

Are the decisions being made about nuclear proportionate and sensible in the light of global population growth, urbanisation and economic development? And are sustainable alternatives available – or indeed genuinely sustainable?

At the Paul Scherrer Institut in Switzerland, Dr Stefan Hirschberg and his team have developed tools to weigh and balance the factors that go into measuring the environmental, economic and social dimensions of sustainability power supply

technologies: factors such as eco-system impacts, cost, availability and accident risk. He has been speaking to Martin Beaver for Insight.

What are the real issues with nuclear?Ultimately,nuclearenergyiscontroversialbecauseitproducesradioactivewastesandpeopleareafraidofaccidents.Overall,thecriticalissueispublicacceptance.

Therefore,effectivesafetyregulationisfundamental,andthewidevarietyofsafetystandardsattheexistingnuclearplantsworldwideisanobstacletodevelopinglastingtrust.Technically,satisfactorysolutionsforthewasteissuehavebeendeveloped.Butpracticaldemonstrationsareneeded–thoughtherearepromisingprojects,particularlyinFinlandandSweden.

Newnucleariscapitalintensiveandsowillonlybeeconomicallyattractiveforinvestorswherethereispublicacceptance,politicalsupportandastableregulatoryenvironment.

Nuclearproliferationtocountrieswithdualaimsfortheirnuclearprogrammesisanothersignificantissue.

Can you see a future without nuclear power in the global energy mix?Abstainingfromnuclearistechnicallyfeasible.Butmeetingambitiousenergy

policygoalswithoutthisalmostCO2-freeoptionwillobviouslybemoredifficult.Forexample,700milliontonnesofCO2havebeenavoidedeachyearintheEUthankstonuclearpower;thatisroughlyequivalenttoallCO2emittedbytheEU’s200millionpassengercars.

Itisstillaminorityofcountries–30ofthem–thatoperatenuclear,thoughinsomethedependenceisveryhigh.Morethan75%ofFrenchelectricityisnucleargenerated,forexample,andthefiguresforBelgium,SwitzerlandandSwedenareall40%orabove.

Chinahasalowproportionofnuclearelectricityatthemoment(1.8%),buthighmotivationforarapidexpansionofitsnuclearcapacityasaresultofitsincreasingdemandforenergyandthedevastatingimpactsofcoal-firedgenerationonhealthandtheenvironment.

If countries come out of nuclear power is there a sustainable alternative?Asustainableenergysupplyneedstomeetanumberofchallengingeconomic,environmentalandsocialcriteria.Itmust

beaffordableandtheremustbesecurityofsupply.Itmustmakeefficientuseoflimitedresources,andminimiseriskstohumanhealth,ecosystemsandtheclimate,aswellashavingbroadpublicacceptance.

Noneoftheavailableenergytechnologiessatisfiesalloftheserequirements.Theyallhavestrengthsandweaknesses.Futuredevelopmentswillcertainlyleadtomitigationofsomeoftheweaknessesbuttrade-offswillbenecessaryforquitesometime.

Wherecountrieshavedecidedtophaseoutnuclear,thesedecisionsarebasedonabeliefthatavoidingtherisksofseverenuclearaccidentsoutweighsthechallenges–andreflectscurrentpublicopinion.

Which countries are prepared now for the alternatives to nuclear power generation?Germanyhasthemostdevelopedexampleofanewenergypolicywithoutnuclear.Itsexpansionofmainlystochastic[variable]renewables,suchassolarandwind,hasbeenquiteimpressivethoughthatsuccessisbasedon(currentlydecreasing)statesubsidies.

However,electricityhasbecomemuchmoreexpensiveinGermany,insufficientgridexpansioniscreatingabottleneckforelectricitysupply,andthereisstillanextensivedependenceonfossilfuels.

Globally,thereisreasonablygoodprogressintermsofexpandingtherelativecontributionofrenewables,thoughsomewhatdisappointingprogressinimprovingenergyefficiency.


Butconstrainedsupplyshouldnotleadustolimittheuseofelectricityasasubstituteforfossilfuels.Weshouldalsocontinuetoincreasetheefficiencyoftheoverallenergysystemthrough,forexample,heatpumpsandelectrificationofthetransportsector.

Asignificantnewfactorisshalegas,particularlyintheUS.Thiscouldenableautonomousenergysupplieswithmajorgeo-politicalimplications.Ontheotherhand,itisnotnecessarilygoodnewsforclimateprotection.

If countries opt out of nuclear, will other countries become their baseload supplier via imports?Importingelectricity,eithernuclearornon-nuclear,isoneoptionforaddressingthenationalelectricitysupplyissue.Itisalsosubjecttomajoruncertaintieswithregardtotheavailabilityofsurpluselectricity,costsandaccesstothegrid.Thisiswhymanycountriesprefertodeveloptheirownsupplycapacitiesinthefirstplace.

Givenpotentialdependenceonimports,thepriorityshouldbeforrenewableelectricity.But,realistically,thismightsimplynotbeavailable.

Importsofnuclearelectricitybycountrieswhichphaseouttheirownnuclear,isethicallyproblematic–evenifitwaspossible.InEuropeitwillbeincreasinglydifficulttobuildupnuclearcapacitiestobeusedpartiallyforexports,thoughsomepotentialnuclearnewcomerssuchasPolandmaybeconsideringsuchanoption.

Would the global industrial and transport infrastructure ever be able to cope without nuclear? Ifthereisawilltodowithoutnuclear–andtaketheconsequences–thenaphaseoutinthelongtermistechnicallyfeasible.However,there’snosuchthingasafree lunch.

Hydropowerwillcontinuetoexpandwhereitisstillunderdeveloped.Butinanumberofcountriesitspotentialisclosetobeingexhausted.Windhasahighpotentialinsomeregionsoftheworld,particularlyoffshore.SolarPV[photovoltaic]costsarebeingreduced,duetotechnologicalprogressandashiftofproductiontoChina–thoughthisbringsanumberofundesirableimpactsontheenvironment.FurthereffortsneedtobemadetoreducethematerialintensityofsolarPV.

Otherrenewablesofinterestincludebiomass(providedthatparticulateemissionsarekeptunderstrictcontrolandresourcesareusedinasustainablemanner),solarthermalandgeothermalenergy–whichhavehighpotentialbutamoderateorlowleveloftechnologicalmaturityrespectively.

Theexpansionofstochasticrenewableswillrequiremajorchangesintheelectricgrid,theprovisionofback-uppowerandthedevelopmentofvarioustypesofstorageoption.Thisallleadstoadditionalcostandtoacceptanceproblems.

Moregenerally,thechoiceofenergytechnologiesshouldtakeintoaccountcountry-specificconditions:theavailabilityofnaturalresources,theclimaticconditions(amountsofsunshineorwind),andinthecaseofnuclear,theleveloftechnicaldevelopment.

It’sironicthatsomeoftheindustrialisedcountrieswhicharebestequippedforthesafeoperationofnuclearareplanningtophaseitout,whileanumberofdevelopingcountriesareplanningtointroducenucleardespitenotbeingfullypreparedformasteringthechallengesintermsofcompetence,infrastructure,regulationandsafetyculture.

Is there a future for nuclear? Timewilltell.Andtimeisfundamentalintheevolutionoftheenergysector.

Thesectorrequiresthedeploymentoftechnologiesonalargescaleoverthelongterm.Furthermore,sinceenergyissocapital-intensive,clearregulatoryrequirementsarehighlydesirableformajorinvestmentdecisions.Largechangesinthesharesofthevariousenergysourcesdonothappenovernightsotheexpectationisthat,globally,fossilfuelswillstillbedominantin2030.Buthopefully,theirsharewillbereducedtowards2050asaconsequenceofexpansioninrenewables.

Ithinkitisquiteunlikelythatnuclearenergywilleverbeabandonedentirely–andhighlyunlikelyintheshorttomediumterm.Itcanplayacentralroleinthefutureinviewofitspotentialcontributionstoprotectingtheclimateandtosecurityofsupply–providedthatitsimplementationwillbeacceptedsocially.Thisinturndependsondevelopmentswithregardtothehandlingofaccidentrisksandwastes,proliferationissuesandtheeconomiccompetitivenessofnuclearenergy.

Yetnuclearalonecannotsolvetheenergysupplychallengesglobally.Renewablesandenergyefficiencyareessentialforthelong-termassuranceofsecuresupply.

Stefan HirschbergobtainedhisPhDinreactorphysicsfromGothenburg’sChalmersUniversityin1981.HesubsequentlyworkedforABBinSwedenandwiththeInternationalAtomicEnergyAgencyinVienna,beforejoiningthePaulScherrerInstitutinSwitzerlandin1992whereheisHeadofEnergySystemsAnalysis.Hecanbecontactedatstefan.hirschberg@psi.ch

Martin Beaver isafreelancewriterwhospecialisesinhealthandsafety,andenergyindustryissues.


October 2012: The550tonnetunnelboringmachine‘Elizabeth’islowered40metresintoashaftatLimmoPeninsula,nearCanningTownineastLondon,thelaunchsiteforCrossrail’seasterntunnel.

CrossrailiscurrentlythelargestconstructionprojectinEuroperequiring21kmoftwin-boretunnelsdirectlybeneaththecitycentreaspartofitsfull118kmeast-westroute.Onceservicescommenceinlate2018Crossrailwilladd10%tothecapital’srailcapacityandbring1.5millionmorepeoplewithin45minutesofitsmainbusinessdistricts.

Astheappointednotifiedbody,Lloyd’sRegisterisscrutinisingthedetaileddesignandconstructionofthecentralsectionbetweenPaddingtonandLiverpoolStreetandwilldeveloptheverificationevidencetocertifycompliancewiththecommonEuropeantechnicalspecificationsforinteroperability.

DEEPDOWN

tunnelsdirectlybeneaththecity

118kmtrackandtunnelintotal

21km


550tntunnelboringmachine

+10%London’srailcapacity


Learnfrompastmistakestoavoidfutureones.SosaystheancientChineseproverb,amaximHongKong’sOrientOverseasContainerLine(OOCL)has

admirablytakenonboardtomakeitoneofthestarperformersinthechoppywatersoftoday’slinerscene.

DespiteatoughfinalquarterOOCL,oneoftheworld’slargestshippingandlogisticscompanies,managedrevenuesandliftingsfor2012thatarelikelytobetheenvyofmostoftheirpeers.

OOCLmoved5.22millionteulastyear,up3.7%from2011.Revenuesgrew6.7%toUS$5.9billion.Intra-AsiaandAustralasiantradesprovedtobethebestperformersaccountingfor2.67millionteuandUS$2.09billioninrevenues.Whileothersremainedmiredinredink,OOCLcontinuestostayinpositiveterritory.

Lessons learnedHistorydictatesthatOOCLisnaturallycautiouswhenitcomestoinvestmentsandservicenetworks.CombinedwithafirmcommitmenttobealeaderinIT,theHongKonglinerfindsitselffarlessexposedthanmanyinthemarket.Thisconservatismstemsfromamassiverestructuringthattookplaceduringapreviousshippingslumpinthemid-1980s.Thelessonslearnedweretheimportanceofmaintainingminimaldebts,usingyourowncapitalwhereverpossibleandfocusingonfamiliartrades,somethingactivelypursuedbytheline’sboss,CCTung,forthepast20 years.

NowthosetradesecretshavebeenpasseddowntothelatestgenerationoftheTungfamilytosteerOOCLthroughthesetoughtimes.LastyearAndyTungsteppedupfromChiefOperatingOfficertoCEOat

Disciplined approachAndy Tung, CEO of Hong Kong’s OOCL, talks to Sam Chambers on how to remain profitable.

OOCL.TungbecomesthethirdgenerationtotakethehelmatHongKong’slargestshippingoutfit,thelinetracingitsrootsbackto1947whenlegendaryownerCYTungkickedoffaservicefromShanghaitothe US.

WhenInsightcatchesupwithTungheisonahecticscheduleofvesselchristeningsanddeliveriesthatseeshimflittingbetweenShanghaiandKoreaforanumberofchampagnesmashingmoments.

SupersizeSignificantlytheKoreantripsawOOCLtakeonitslargestshipstodate,apairof13,208teuships.Lestpeopleforgetinthesensationalclimbupthesizechartsofcontainershippingoflate,aperiodthatseesshipsofupto18,000teubeingbuilt,itwasOOCLthatusheredinthissupersizedgenerationadecadeago.In2003,OOCLtookdeliveryoftheworld’sfirstsuperpost-panamaxcontainership,OOCL Shenzhen,whichat8,063teubrokesizerecordsandusheredintheneweraofmegaboxships.

Thenewshipsareallpartoflongheldplanstoreducechartered-intonnagetoaroundoneinthreeshipsatOOCL;itsfleet’saverageageofundersix-yearsoldisamongtheyoungestintheindustry.

Tungisawareofthetoughconditionsfacinghisfamilyfirm,butlikehisunclebeforehimhegreetstheseproblemsfaceonandwithalevelhead.

“Inlinewithourearlierforecast,”saysTung,“2012provedtobeanothertoughenvironmentforthecontainershippingindustrywithweakdemandgrowth,volatilefuelprices,andunsustainablefreightratesformanymajortradelanes.”

HerecountshowsignificantfreightrateimprovementsdidnotmaterialisewhenAsia-Europevolumesbegantoshrinkearlierintheyear.Bunkercostsremainedhigh,andinviewofwhathedescribesas‘thelingeringovercapacityissuethatwilllikelycontinuetohaunttheindustrywellinto2013’,manycarrierswillanticipate‘hugechallenges’inadjustingtheirproductstructuresandoptimisingslotutilisation.

Challenges aheadEverytradethatOOCLisinfacesitsowndifficulties,eventhecompany’serstwhile

revenuemainstayofintra-Asia,asTungelucidates:“AsthesluggishconsumerdemandgrowthfromtheWestcontinuestoaffectthedemandofgoodsproducedbythefactoriesfromtheEast,theintra-Asiatradethatmovesthecommoditiestoproducethosefinishedgoodswilllikelycontinuetofacechallenges.”

SincetheAsia-Europe,trans-Pacificandintra-Asiatradesaccountformorethanhalfofthecapacityliftedglobally,Tunganticipatesmanycarrierswillspendmoretimeexploringnewopportunitieselsewheretofilltheirships.

Howeverdifficulttheconditions,Tungisresolute.“Nomatterhowtoughthemarketenvironmentis,”heaffirms,“theindustrywilllikelyremainresilientin2013,workingtowardsamorepositivesupplyanddemandbalance.”

Tothisend,Tungappealstohisfellowcarrierstomaintainstrictcapacitymanagementinthisbrittleenvironment.

“Itiscriticalthatapartfromtheneedforeffectivecostcontrollingmeasuresontheindividualcarrierlevel,disciplineincapacitydeploymentandtheabilitytoholdontosustainablefreightrateswillalsobeessentialontheindustry-wideleveltohelprebuildamorestableandhealthierbusinessenvironmentforall,”heconcludes.Wisewordsfromsomeonewhohaslearnedfromthepast.

AndyTunghasservedthegroupinvariouscapacities,includingasdirectorofreefertradeofOOCLbetween1993and1998.Heleftthefamilyfirmforawhiletopursueotherinterests,aperiodoftimethatsawhimrisetobecomechiefoperatingofficeratHongKongDragonAirlines.Herejoinedthegroupin2006andwasappointedOOCL’sCOOinJanuary2009.

TungholdsaBachelordegreefromPrincetonUniversityandanMBAfromStanfordUniversityintheUS.HeistheeldestsonofCHTung,theformerchairmanofthegroupwhobecameHongKong’sfirstleaderaftertheterritorywasreunifiedwithChinain1997.

Sam ChambersistheeditorialdirectorofAsiaShippingMedia,thepublishersofMaritimeCEO,SinoShipandSeaShipNews.

powerfulglobalnetworksthatarechangingthenatureofmoderncommunication.IntheUSandtheUK,morepeopleuseFacebookthanthetopnewswebsitesputtogether–socialnetworkingtakesaround20%ofpeople’stimeonline.

Therearemanyreasonstoholdback–fromshortageoftimetolegal orotherconcerns.Netflix’sReedHastingsiscurrentlyfacinga potentialSEClawsuitoverstatementshemadeonFacebook.Butmanyoftherulesthemselveshavebeenthrownintoconfusionbythe speedandubiquityofsocialcommunication.Hastingshaspledgedtocontinuetalkingandsharinginformationwithcustomersandevidencesuggeststhatheisrighttodoso.Inonerecentsurvey71%ofrespondentssaidCEOparticipationinsocialmediaimprovesbrandimage,78%saiditledtobettercommunication,and64%said itprovidesmoretransparency.

Building trust Itistruethatsocialmediahasblurredthelinebetweenpersonal andprofessional–givingrisetoanumberofnewbusinessdilemmas.Therearemanycelebratedexamplesof

employeessayingthewrongthing,butonthewhole,thesemistakesarebecominglessfrequentandcanbemanagedwiththeadoptionofclearandsensibleguidelines.Anovercautiousapproachmaybestoppingcompaniesseizingthebiggerbenefitswhichincludegettingclosertocustomers,andengagingwiththeminentirelynewways.Herearejustafewexamples.

@ PresidentObamaputsocialandpersonalcommunicationattheheartofhissuccessfulre-electioncampaign.Socialmediawasnoadd-on–hisvictoryannouncementwasmadefirstonTwitter.

@ CompaniesliketheBBCarenowusingsocialmediaroutinelyaspartoftheirproductdevelopmentprocess–listeningtocustomersandworkingwithbloggerstoidentifyproblemswithnewsoftware releases.

@ AndcompanieslikeDellhaveinvestedheavilyinpeopleandsystemstosupporton-goingcommunicationwithcustomersviasocialmedia.Thatinvolves,listening,respondingandultimatelyselling producttoo.

Embeddedwithintheseexamplesarethenewrulesofthesocialmediagame.Opennessandtransparencybuildsthetrustthateventuallyallowsyoutotalkaboutproductsandserviceswithinthese personalnetworks.Inmanywaysthisisnotabouttheterm‘socialmedia’atallbutaboutthecultureofacompanyandthewayit communicates–insideandout.Socialmediaarenotaboutaquickwinorafastreturnoninvestment.Theyarealsonotanadd-ontoyourexistingwayofdoingbusiness.Theyinvolveputtingaudiencesandnetworksattheheartofyourcommunication.Todothat,aboveall,meanscastingoffthefearandtakingtheplunge.

Nic NewmanisformerseniornewmediaexecutivewiththeBBC.HeisadigitalstrategistandvisitingfellowattheReutersInstituteforthestudyofJournalismatOxfordUniversity.

A fewmonthsagoIhadthesurrealexperienceofsittingwithinthewallsoftheVaticanlisteningtoone ofPopeBenedictXVI’stopadvisorsespousingthebenefitsofsocialmedia.ArchbishopCelli,who

luxuriatesinthetitlePresidentofthePontificalCouncilforSocialCommunications,wasspeakingattheendofthePope’sfirstweekonTwitter.TheArchbishopexplainedthatthePopewasawareoftherisksanddangersofsocialmedia,butfeltthesewereoutweighedbytheopportunitytodiscussanddebatethereligiousmessagewithsuchalargeglobalcommunity.

ThePopeisnotalone.ArecentreportbytheDigitalPolicyCouncilshowedthat75%oftheworld’sleadersnowhaveanactivepresenceonTwitter–twiceasmanyastheyearbefore.Afteryearsinwhichsocialmediawasviewedasafrivolousdistractionatbest,thereisagrowingrealisationamongstthosewiththemostseriousofoccupationsthattheremaysomethingofgreatvaluehere.

Andyetoddlybusinessislaggingbehind.Lessthan5%ofCEOsof Fortune500companiesareonTwitterinapersonalorprofessional capacity;lessthan10%areactiveonFacebook.

WhilemarketingdepartmentsenthusiasticallyconceiveviralvideosandsetupFacebookpagestopromoteproducts,thereisarealfearinmanyorganisationsoftheconsequencesofengagementand transparency.

BacklashAtonelevelthisfearseemsjustified.When Netflixannounceditwaschangingitspricingstructure,itledtoahugecustomerbacklashwithtensofthousandsofnegativecommentsacrossitsblogsandonFacebookandTwitter.Withinmonthsthecompanylost 800,000customersandtwo-thirdsofitsmarketvalue.

SocialmediawasalsoblamedwhenBritain’sbiggestsellingnewspaper,theNews of the Worldclosedinthewakeofphonehackingallegations.AdvertisershadfeltpressuretopulltheirsupportforthepaperfollowingpetitionsandpopularoutrageinFacebookandTwitter

ButthesenetworksdidnotcausetheprotestsagainstNetflixandNewsCorp–justastheydidnotbringdowntyrannicalregimesinthe‘Arabspring’.Whattheydidwastoamplifyandspeedupthenatureofdissent.Intheprocesstheyareincreasingthepressureon businessesandinstitutions.

Join the debate Socialmediaruthlesslyexposesthedifferencesbetweenpoliticiansandtheirvoters,businessesandtheircustomers.Itsveryspeedalsodemandsrealtime,24/7responsesacrossmultiplechannelsandamoreconversationalwayofcommunicating.Socialmediaisnoisyandunrulybutjoininginwiththoseconversationscanoftenhelpdefuseproblemsbeforetheyemerge.Mostpressofficeswithhierarchicalcheckingprocessesandtraditionalskillsetsaresimplynot equippedtodealwiththenewmedialandscape.

Injustafewyears,networkslikeFacebookandTwitterhavegonefrommarginalactivitytomainstream–intheprocesscreating

In one recent survey 71% of respondents said

CEO participation in social media

improves brand image


GREEN MACHINESMonika Bomba from the Society of Motor Manufacturers and Traders talks to Robert Gibson on how car makers are investing in green standards.

Likeallindustries,theautomotivesectorisfacingachallengingtime.Thecurrenteconomicclimateandweakconsumer

confidencehaveresultedinfallingvehicleregistrationsacrossEurope.TheseconditionshaveforcedmanufacturersintheUKtolookevenharderatallareasoftheirbusinessandsearchfornewwaystoimproveefficiencies,innovateandcaterforchallengingcustomerneeds.

Oneoftheareasmanufacturersarefocusingonisenvironmentalstandards.Soatatimewheneverynewinvestmentisbeingcloselyscrutinised,whyarecarmakersplacingtheirbetsongreen?

Investing in the environmentTherecentlypublished2012AutomotiveSustainabilityReport(www.smmt.co.uk/sustainability)bytheUK’sSocietyofMotorManufacturersandTraders(SMMT),focusesonthreeareas;social,economic

andenvironmentalperformance.Trendsinthereportindicatethatenvironmentalimprovementsaremorepressingthanever,withinnovationinmanufacturingandtechnologybehindsomeofthesector’smajorachievements.AsPaulEveritt,SMMTChiefExecutiveexplained:“Besidesthesubstantial23%improvementinaveragenewcarCO2emissionssince2000,anefficientandgloballycompetitivemanufacturingbasehascontributedtodrivingdowneverysinglekeyenvironmentalindicator.Fromsubstantiallycuttingtheamountofwastegoingtolandfilltosignificantreductionsintotalwaterusage,efficienciesateverylevelofmanufacturinghaveproducedoutstandingenvironmentalresultsforUKautomotive.”

Whilesomeindustriesareonlyjustlearningthevalueofenvironmentalimprovementsforbusiness,themotortradeisnotoneofthem.“Formanufacturers,themotivationforimprovingtheirenvironmentalperformanceistwofold,”says

MonikaBomba,TechnicalManager–EnvironmentattheSMMT.“Obviouslythefirstisawarenessoftheenvironmentalimpactoftheirindustry’sproductionprocesses,officeactivitiesandproductuse.”ThereductionofCO2emissionsarisingfromtheproductionprocesshasseengreatprogressinrecentyears.ButCO2isnottheonlydriverforchange.

“Thesecondmainmotivationiscost:environmentalimprovementusuallybenefitsanorganisationfinanciallytoo,”Bombasays.“Implementingcertainmeasurescanreducetheamountofwaterorelectricityyou’reusingforexample,whichreducesyourcosts.Qualitymanagementissomethingthatishighlyintegratedintotheproductionprocesses,somethingwhichhappensonadailybasis.Fromapracticalpointofview,theresultsofaqualitymanagementapproachsavemoney–that’senoughinnovation alone.”

Improving energy performanceTheSMMTreportshowsthatmanufacturersarekeentousemanagementstandards


suchasISO50001andISO14001toimproveenvironmentalperformance.

BentleyMotors’headquartersinCrewewasthefirstplantintheUKautomotiveindustrytoachievecertificationtotheenergymanagementstandardISO 50001,inrecognitionofcontinuousimprovementinenergyefficiencyandthe organisation’scommitmenttoreducingitsoverallenvironmentalimpact.Theorganisationhasatrackrecordinthisarea–itbecamethefirstofitskindtoreceivecertificationtotheenvironmentalmanagementstandardISO14001,in 1999.

AuditedbyLloyd’sRegisterQualityAssurance(LRQA),Bentley’sCreweplanthadsuccessfullyimplementedaseriesofinitiativestoimproveitsenergyrecord,includingimprovedheatingandlighting,bettercontrolledboilerandcompressedairsystems,greaterinsulationandmoreefficientvariablespeeddrives.Theresultsspeakforthemselves.Between2000and2010,theenergyusedonsiteforeachcarproducedwasreducedbytwo-thirds,andby14%fortheoverallsite.AccordingtoBentley,thisdeliveredsavingsof230GWhofenergy–enoughtopower11,500housesforayear.Duringaperiodbetween2002and2007,whencarproductionincreasedtenfold,theorganisationwasabletoboastthattherehadbeennocommensurateincreaseinenvironmentalimpact.Andwhiletheinitialoutlaywasconsiderable(Bentleysaysa’significantproportion’ofits£1billioninvestmentintheplantwasdevotedtoenvironmentalimprovements)theresultswerewelcomed.

Speakingaftercertificationwasreceived,MichaelStraughan,memberoftheBoardforManufacturingatBentley’s,said:“It’satributetotheeffortsofeveryonehereinlookingfornewandinnovativewaysto

improvetheenergyperformanceofourfacilities,andIknowthiscommitmentwill continue.Bentley’scommitmenttoimprovedenvironmentalperformancegoes beyondthefactoryitself.In2008,we announcedanenvironmentalstrategyfor ourproductsthatisdeliveringafleetreductioninCO2ofmorethan15%infour yearsandtheintroductionofanewpowertrainwhich,byitself,improvesfuel economyby40%.Addedtothisisa productionvolume,90%ofwhichiscompatiblewithsustainablebiofuels.WearedeterminedthatBentleyshouldbetheleaderofthehighluxuryautomotivesectorintermsofenvironmentalperformance.”

Inotherareas,Bentley’swasterecoveryandrecyclingstrategyisachievingarecyclingrateof77%,quicklyapproachingitstargetof80%recycling.Andwaterusage–amajorpartoftheorganisation’scarbodycoatingprocess–hasbeenhalvedoverthepastdecade.

The road aheadAsStraughansuggested,manufacturerswillcontinuetoplaceemphasisonthevalueofenvironmentalinnovationastheirresearchanddevelopmentfunctionsstrivetogivetheirorganisationthecompetitiveedge.Bombasays:“Somedaywe’llreachapointwhenwecan’tmaketheexistingproductionprocessesanymoreefficient.AlotofSMMTmembersarenowlookingtoproducerenewableenergyon-site(forexample,solarpanels,windturbines,carbonneutralelectricityandheatfromvirginbiomass),asanotherwaytoreduceourcarbonfootprint,inadditiontousinggreenenergytariffs.”

Suchattitudesarenotyetreflectedinthevehicleuptake.TheSMMTreportshowsthatin2011,registrationsofalternativelyfuelledvehiclessuchaselectriccarsand

petrolelectrichybridspassed25,000forthefirsttime.Progressisslow.Thereisawidechoiceofelectricvehicles(EVs)onthemarket,butultimatelyitdependsonuptake–theUKneedspeopletoactuallybuythem.WhilethereissubsidyfromthegovernmenttoencourageconsumerstobuyEVs,theeconomicconditionsarenothelping.AndEVsarenotnecessarilyanenvironmentalsolutionalone–tohavearealimpact,thesourceofelectricitymustberenewable.Fordrivers,theiroverallcarbonfootprintwoulddependonwhichcountrytheyareinwhentheyplugintheirelectric car.

Whilethemotivesoftheautomotiveindustrywillalwaysremaininseparablefromtheeconomicandpoliticalclimate,carmakersaremakingsteadyprogressduringchallengingtimes.Fewareableto matchtheautosector’sinvestmentof £6billionoverthepast18months.Sustainabilityisaboutbalancingtheeconomic,environmentalandsocialconsiderationstomakesurethebusiness remainsviable.Despitethechallengesexperiencedduringthefirstdecadeofthe 21stcentury,mutuallybeneficialinvestmentintheenvironmentisbeingmadeyear-on-year,andUKmanufacturers havetheevidencetoproveit.

Robert GibsonisDeputyEditorofQuality World(QW )theflagshippublicationoftheCQI,withamonthlyreadershipof34,000.Lloyd’sRegisterisa memberoftheCharteredQualityInstitute(CQI)–www.thecqi.org.


A wintryDecemberwindwhistlesthroughtheupperconcoursesofLondon’sStPancrasstationandasmallgrouphuddles

closertogetherastheylistenattentivelytoa tourofthestation’soperations.

Amongthegroupisadelegationfromthe TaiwanHighSpeedRailCorporation(THSRC)ledbyDrOuChin-Der,itsChairmanandChiefExecutive.

Strictlyspeaking,withjust108kmofpurposebuilttrack,thereislittletheUKcanteachDrOuandhisteamabouthigh-speedpassengerservices.

AGAINST THE ODDSTaiwan’s high-speed railway has survived earthquakes, typhoons and the recession to become a popular and profitable success story, says Andrew Foulkes.

However,therecentredevelopmentofSt PancrasandneighbouringKing’sCrossstationareadmiredwithintherailindustryasmuchfortheircommercialprowessastheyarefortheirarchitecturalsplendour.

Itisestimatedthataround20%ofthosemillingaboutStPancrasatanygiventimearenotthereforitsdomesticorinternationaltrainservices,butitsretailboutiques,plushcafesandtop-endhotel.Andnow,onadjacentbrownfieldtotherearoftherejuvenatedstations,anentirelynew65acrecommercialdistrictisunder construction.

ThisiswhatTHSRChavecometosee:followingasuccessfulturnaroundoftherailway’spassengernumbers–whichrecentlypassed200millioninjustsixyearsofoperations–attentionisnowstartingtoturntowardsthepotentialfordevelopmentofitsownstationsandadjacentland.

Engineering marvelTheTaiwanhigh-speedrailwayis,initself,somethingofanengineeringmarvel.Itconsistsofasingle345kmnorth-southroutealongtheisland’swestcoast,connectingthecapital,Taipei,tothesoutherncityofKaohsiung.Thevastmajorityisbuilteitheruponviaductsorthroughtunnelsandsubjectedtosomeoftheworstthatnaturehastothrowatit,includingsummertyphoonsandfrequentearthquakes;ithassurvivedmorethan150ofmagnitude4orhighersinceitopened.

Despitethis,therailwayhasperformedremarkablywellandboastsaperfectsafety


recordthanksinnosmallparttoasophisticatedwarningsystemthatautomaticallyreducesspeeds,orbringstrainstoahalt,duringmajorseismicevents.

Butitisnosecrettherailwayexperiencedadifficultstart.WhenTHSRCwona35-year‘build–operate–transfer’concessionin 1998itwasamidtheturbulenceexperiencedacrosstheAsianeconomiesin thelate1990s.Whilesimilarprojectswerescaleddownorabandoned,THSRCperseveredwithwhatremainsoneofthelargestprivately-fundedrailprojectsever undertaken.

BythetimeservicescommencedinJanuary 2007theyweremorethanayear late, meaning12months’revenuehadbeenlost.Justastroublingweretheinitialpatronagefigures–aroundaquarterof thoseanticipated–andashortfallincommercialandresidentialdevelopmentalongtheroute.

AGAINST THE ODDSNo easy rideSuchexperiencesgosomewaytoexplainingwhyhigh-speedrailstilldividesopinion.

Thoughoftenperceivedasfuturisticandcuttingedge,high-speedrailisapproachingits50thbirthday(Japan’sShinkansenopenedin1964).YetbeyondnetworksinJapan,France,Germany,andonlymorerecentlyinSpain,ItalyandChina,itremainslimitedtotheoccasionalhundredmileshereandthere,mainlyinAsiaandWesternEurope.

Schemesarefrequentlyannouncedinevery corneroftheworldbutmostflounder.Inpartthisisduetothecostsof purpose-builtaerodynamicrollingstockandthededicatedinfrastructurethatminimisescurvatureandavoidscrossingswithconventionalservices(thoughinsometerritories,suchasGermany,conventionallineshavebeenrefurbishedforhigh-speed fleets).

Furthermore,newbuildsinevitablyprovoke animositywithinthecommunitieswhereserviceswillracethroughwithoutstopping(asillustratedonpage33).Thismeansexpensivewranglesoverlandpurchasesandnoisemitigationmeasures.

Thereisalsodebateoverhigh-speedrail’sactualcompetitiveedgeoverothermodes.Generalconsensusisthattheydependheavilyonthepresenceoftwohighdensitypopulationsateachendofaroutethatisnoshorterthan150kmandnolongerthan800km.Onshorterorlongerroutestheadvantagesquicklydissipate.Butnotevery country’scommercialmapfitsthese dimensions.

Nosurprise,then,thatinthefaceofsuchpoliticalandfinancialrisk,promoterscanloseheart.Andmoreoftenthannotit’sbecausetheirschemeslackedacompelling


The intention was to create a new market –

to enable people to travel between our economic

centres and return home in a single day

DrOuChin-Der,ChairmanandChiefExecutiveoftheTaiwanHighSpeedRailwayCompany(THSRC)

businesscasefromtheoutset.Isitabouttacklingthegrowthinairtravel?Boostingnetworkcapacity?Increasingnationalproductivity?Spreadingeconomicgrowth?

Back on trackForTaiwan,asDrOuexplains,ahigh-speed railwaywasverymuchinkeepingwiththecountry’sownphysicalandeconomicgeography.

“Theintentionwastocreateanewmarket–toenablepeopletotravelbetweenoureconomiccentresandreturnhomeinasingleday.Thishasopenedupcommunitiesandregionstoourmaincentres.”

Withlargelymountainousterrainintheeast,themajorityofits23millioncitizensareconfinedtoacorridoralongthewesterncoast.

CommutersbetweenTaipeiandKaohsiungpreviouslyhadtochoosebetweenafourhourjourneybyconventionalrailoracomparativelyexpensive30minuteflight.Communitiesin-between,meanwhile,wereforcedtomakedowiththeunpredictablenationalroadandrailinfrastructurethatwasalreadyunderconsiderablestrainduetothesheerconcentrationofthepopulation.

ButTHSRC’strains–capableofreaching300km/h–cuttheTaipeiandKaohsiungjourneytimetoaround90minutes.Stoppingservicesconnecttosixotherregionsalongtheroute,regionsatriskofslippingtoofarbehindTaiwan’smaineconomicengines.

Crucially,theplanwasnotdependenton targetingthebusinesscommunityor challengingthedomesticaviationmarket–areasonoftenstatedbymanyother projects.

“HighSpeedTrainhasverylargecapacitycomparedtoairlines.Icannotrelypurelyonattractingairpassengersawayfromthe flights,”saysDrOu.

“Thebusinesstravelmarketonourhigh-speedserviceisonlyabout30–40%.Wethereforelookedbeyondthebusinesstravellerthatdefinestheaviationmarket,toopenupnewopportunitiesforfamilies,andtouristsfromabroad,totravelthelengthofthecountryandbackinasingle day.”

Inevitably,ittooktimefortravelhabitstoadjusttoforecasts.Butthisisnotunique:passengernumbersfortheLondon–Paris–Brusselsnetworkin2010,ataround9.5million,werebarelythoseoriginallyforecastfor1996byitsoriginaldevelopers.

However,THSRCpassengernumbersarenowmorethandoublethoseofitsfirstyearofservice.This,alongwithagovernment-backedrefinancingdealtoreducetheinterestrate,andageneralupturnintheeconomy,hasenabledTHSRCtoreportitsfirstprofitsin2011,justfouryearsintoservice.Aremarkableturnaroundinsuchashortspaceoftime.

NowTHSRCisexpandingwiththreenewstationsalongtherouteandashort

extensiontoTaipei’sNangangDistrict.As withtheoriginalroute,Lloyd’sRegisterwillbeprovidingindependentsafety-assessmentservicesthroughout.

Securing the futureWhenthetimeisright,THSRChopeitsstationpropertieswillalsoonedayactasanchorsforfutureeconomicdevelopmentinthecommunitiestheyserve.

ScanningthehorizonofthenewKing’sCrossneighbourhoodrisingfromapreviouslyindustrialanddowntroddenareaofnorthLondon,DrOuisclearlyimpressedwiththescaleoftheambitionondisplay.

“Ourstationsareincentrallocationsandintegratedwithexistingtransport,sotheopportunityisthere–theimmediateenvironmentsarecurrentlyempty,”says Dr Ou.

However,hewarns,thereisnomagicformula:“Therearedifferentstylesofdevelopment.Everysuccessfulprojecthas somethingbehindit.Whetheritisin its architecturaldesignoritsfunctionwithintheneighbourhood,whatisimportantisthatthedevelopmentis right forthatlocation.”

ThisisthesamemindsetthatensuredTaiwan’srailwaystandsasproofthatwith carefulplanningandaclearpurposeabouthowitwillcarveoutanewmarket,high-speedrailcanbebothbeneficialandprofitable.

Taiwanbuiltasystemthatwas‘rightforthelocation’–onethatsuitedtheneedsofthecountry’seconomiclandscape,offeredthehighesttransitvolumeforthelowestlanduse,andmetlong-termreductioninenergyuseandpollutionlevels.

Despitetheobstacles,Taiwandemonstratesthathigh-speedrailcanenteritsnexthalf-centuryasapopular,sustainableandefficientmodeofinter-citytravel.

Andrew FoulkesisLloyd’sRegister’sTransportationCommunicationsManager.

[email protected] me@andrewfoulkes_LR


“Whoever wrote that, should be fired” says an angry resident to no-one in particular but looking at a group of us circled around the same display panel.WeareintheclubhouseofalocalamateurrugbyclubinAmersham,Buckinghamshire,wheretheUK’sDepartmentforTransportisshowcasingtheplansfor‘HS2’,aproposedhigh-speedline,initiallyfromLondontoBirmingham,toresidentsalongtheroute.Allgoingtoplan,serviceswillbepassingwithinyardsofwherewearestandingfrom2026,atacostputatsomewherearound£19billion.AsecondstagewouldthenextendtoManchesterandLeedsaroundsixyearslateratatotalcostofaround£32billion.

Theoffendingstatementinquestionclaimsthat‘Wesoughttoidentifyarouteusingthefollowinghighprinciples:avoidinghomes,communitiesandenvironmentallysensitiveareas’.Butisoneofthemanyassurancesscoffedatbytoday’svisitors,alongwithstatementsthatonlyasmallnumberofhomeswillexperience‘aperceptibleincreaseinnoise’andno‘on-going’overnightmaintenance.

It’saslickpresentationwithtouchscreensdetailingeveryaspectoftheconstruction,soundboothsdemonstratinganticipatednoiselevels,amultitudeofliterature,andharassedofficialscalmlytryingtodousetheclaimsofthe‘StopHS2’campaigners,whoarepitchedoutsidethefrontdoors.

LocalsareunderstandablyconcernedandHS2isprovingatoughsell.Thisisdespite

someexpensivecommitmentsregardingvisualandnoisereduction.ItisworthnotingthatdespitesimilarconcernsfromresidentsduringtheconstructionoftheUK’sonlyexistinghigh-speedroute,betweenLondonandFolkestone,thatneitherEurostarnorKentCountyCouncilhavesincereceivedanynoisecomplaintssinceservicesbegan.

TheargumentsforandagainstwillrageonasBritain’scomplexplanningsystemdigestswhatwouldbethelargestinfrastructureprojectthecountryhascommittedtoforageneration.

ButBritainneedsthisrailway–itsnetworksarethebusiesttheyhavebeensincethe1950sandalreadystretchedtothelimit.PartsoftherecentlyrefurbishedWestCoastline(whichtheproposedroutewillfollow)willbefullby2020.Tweakingandadaptingtheexistinginfrastructurewillnolongersuffice.

Besides,withnomajorriverstocrossormountainstotunnelthrough,fourofBritain’sleadingeconomicandtransporthubs(London–Birmingham–Leeds–Manchester)canbeconnectedwithamere300milesofnewtrack.Europeancompetitorswouldseethatasabargain.

Amidthewarofwordsthescheme’ssupportersareunfortunatelypronetoconfusingtheirownarguments–onedaytherationaleiscapacity,thenextit’seconomicgrowth–whichcanbeunhelpful.HS2stillenjoyscrosspartysupportandlegislation,intheformofaHybridBill,forPhase1(LondontoBirmingham)isdueinParliamentbeforetheendof2013.

Butthereisalongwaytogobeforeconstructioncouldstartsometimein2018andmanycommunities,likeAmersham,tobewonoverinthe meantime.

HS2: WHEN IT’S YOuR BACKYARD


In 1960, when Ravi Mehrotra left school in Kanpur, in the North of India, he followed what he calls his ‘little dream’. He wanted to see the world. To do so he needed a profession – and he chose shipping. Kanpur was a long way from the sea but the young Ravi had a plan to make his dream come alive, to grow into reality: he would become a marine engineer. Hesawtheworldandagreatdealmorebesides.Today,withadiversifiedbusinessempirespanningships,rigs,shoesandrestaurants,Mehrotrahasresponsibilitiesfarbeyondtherunningofship’sengines.Hehascomefarfrom,buthehasneverlostsightof,hismodestbeginnings.

What’s in it for you?AndnowMehrotrahasadded‘author’tohislistofachievements.Hisbook,What’sinitforyou?emergedfromafirstattempttowriteabiography.SpeakinginhisofficeintheCityofLondononthewettestofdaysinawetwinter,Mehrotrasayshecouldnevergetcomfortablewiththeideaofpublishinghislifestory.Thebiographywasshelved.Someyearslaterthesuggestionwasmadethathecouldusehislifeexperiencestoproduceamanagementbookbuiltaroundaseriesofcasestudies.

Andthatiswhathehasdone.ThebookchartshislifethroughaseriesoflessonsfromKanpurtohislifetodayinLondonandaveryinterestingdecadeorsoinIran,straddlingthetimeoftheShahandtheimmediatepost-revolutionperiod.

Whereperhapsthebookismostsuccessfulisinrecallinghisthoughts,andwhathappenedtohim,inthetimebetweenleavinghomeandthepointwhereheemergedasashipowner.Oftenthestoriesofthewellknownsomehowskipneatlyoverthatcriticalperiodbetweentheearlyformativeyearsandtheeventualskillorcareerforwhichthesubjectwouldbecomebestknown.

What’sinitforyou?,concludeswithastep-by-stepprocessdesignedtohelptheyoungchoosewhatpathtofollow.ThisaddsfurthertothesensethatthisperiodandthedecisionshemadethenarestillimportanttoMehrotraandformedapatternthatwouldshapehowhislifeunfolded.Oneofthekeystothelifehehasled,andhisopennesstoadventure,ishisattitudetotakingadvantageofopportunitytofurtherhisgoals:‘Evaluateeachopportunity,askyourselfwhetheritisconsistentwithyourgoal…thetruthofthematteristhatopportunityiseverywhere.JustopenyoureyesandLOOK.’

From India to IranMehrotrahascertainlyhadhisadventures.

AftergraduatingfromtheDirectorateofMarineEngineeringandTraininginCalcutta,withthemedal,‘BestAllRoundCadetSuitablefortheMerchantNavy’hefollowedacareeratseaas

The Guru: Ravi Mehrotra engineer, shipowner, businessman, philanthropist and philosopher

‘I developed a burning ambition to become a shipowner of repute’

Nick Brown talks to Ravi Mehrotra, founder of the Foresight Group of companies.


© Courtesy of Joop KlaasmanRaviMehrotra(right)asanapprenticeattheKolkatashipyard

amarineengineerwithShippingCorporationofIndia(SCI).SubsequentlyhecameashoretoworkforSCI,wherehewouldembarkonwhatwasoneofthecentralperiodsofchallengeandopportunityinhislife.Secondedtopre-revolutionIrantoestablishajointventurecompanyforSCI,helivedthroughtheupheavalsoftherevolutionandtheIran-IraqwartoestablishaseriesofshippingbusinessesindifficultcircumstancesandbecamePrincipalAdvisoronShippingtothenewgovernment.

LeavingIran,in1984heestablishedhisownshippingcompanyinLondonandin1986boughthisfirstship.

ButhestillhadonebigIranianadventuretomanagewhenhewasaskedtohelpIranexportitscrudeoilwhileunderthreatofExocetmissilestargetingtheKhargIslandexportterminal.“HavingcarefullystudiedtherisksofthehelicoptermountedExocets,weestablishedaVLCC(verylargecrudecarrier)tankershuttleservicerunningshipmentsofcrudeoilfromKhargIslandtofloatingstorageandloadingterminalsusingULCCs(ultralargecrudecarriers)intheStraitsofHormuz,”heexplains–alongwayinallrespectsfromthedesertheat.Heconsidersoneofhisfinestachievementstobedealingwiththeassociatedinsurancerisks.InsurancerateshadrocketedunderthreatoftheIraqimissilesandMehrotraestablishedIranianunderwrittenwarcoverpolicytocovertherisksinvolved.

In1989heestablishedadrillingcompanyandacquireddrillrigsbuthismainfocuswasofrefrigeratedcargoships(reefers).AndthiseventuallyledhimtoadventureintheUScapitalmarketstofundfurthergrowth.

Make failure workRaising$100millionofhighyieldbondsintheUScapitalmarketsin1997tofinancetheacquisitionofmorereefers,helaterhadtofighttokeephiscompanywhen,followingadownturninthereefermarkets,hisinvestmentvehicleAmerReeferCompany(ARC),becamesubjecttoatakeoverbattle.ARChadbeen

unabletokeepupinterestpaymentstobondholders.MehrotraisadmirablycandidaboutallthisinLifeLessonNineofthebook–‘Makefailurework’.

Eventually,heemergedfrombankruptcyproceedingswithhiscompanyandhasfoughtoneversince.Todayheremainsashipowner,drillrigowner,ownerofsixrestaurants(includingthefirstIndianrestaurantinBeijing)andtheownerofalargeshoebusinessinIndia.

HehasfondmemoriesofLloyd’sRegisterfromtheearliestofhisshippingdays,“Lloyd’sismyhome”,hesaystoday.“IsentmanyableyoungsurveyorstocareersatLloyd’sduringmySCIdays.”Lookingaheadhesaysthathehopesclassificationsocietieswillconsidercertifyingthecompetenceofships’crewsand,asacommitteemember,hehasalwayspushedthisagenda.

Ifthereisanoverallthemetohislife,andhisbook,itistheimportanceoffamilyandensuringthatyouhavebalanceinyourlife.

Heseesitasvitaltogivebackoutsideofwork.Inhishometownhehasestablishedacharitableschool,namedforhisbelovedmother,toprovidethelessfortunatewithachanceofacareeratsea.TheAmerMaritimeTrainingAcademywasinauguratedin2002andprovidesapathwaytotheseaforthe‘poorestofthepoor’tobecomeratings–thegeneralseafarersonboardmerchantships.Now16youngpeoplegraduateeverythreemonths.

Mehrotrafoundhispathandaswellasprovidingaroutetotheseaforthelesswelloff,hehasnowshared,inamostengagingmanner,hisownpathwaythroughlifeanditslessons.

Nick BrownisLloyd’sRegister’sMarineMediaManager

[email protected] me@nickbrown_LR

RaviMehrotraisamemberofLloyd’sRegister’sAdvisoryCommittee.


“Thewell-beingoftheworldlargelydependsontheworkoftheengineer,”saidoneofthe20thcentury’smostdistinguishedpractitioners,SirWilliamHalcrow.Hebelievedthatforthosewith‘imaginationandkeenness’herecouldnotbeabetterprofession.

Engineershavemade,andcontinuetomake,avitalcontributiontotheadvancementofsociety.Now,astheworldfacesarapidlyincreasingpopulation,alongwiththeinexorableriseofurbanisation,theopportunitiesforskilledengineersarepracticallylimitless.

Shrinking poolYetdespitethis,theirnumbersareshrinking.Inrecentyearstherehasbeenmuchtalkof a talentwarand,particularlyindevelopedeconomies,thereistheissueoftoomany‘babyboomers’poisedtoretireandtoofewyoungpeoplepickingupthebaton.Overall,manycountriesareseeingaslumpinnumbersenrollingonengineeringcourses.

“Whenthebankingcrisishitin2008,there weresuggestionsthatthewaron

talentwasfinished,”saysGregAllen,GlobalHeadofResourcingatLloyd’sRegister.“Butithasn’tgoneaway.Ourexperiencedpoolisshrinking,aspeoplegetolderandretire,andwearelookingatwheretomorrow’stalentwillcomefrom.”

BMT,aninternationaldesign,engineering,scienceandriskmanagementconsultancy,hasnoticedasimilartrend.“It’snotjustashortageofengineersgenerallybutalsothosewhohaveconsultancyandcustomer-facingskills,”saysHeadofHRAnneSegall.“Themorespecialisedtheskills,themoredifficultitgets.”

In2012,EngineersAustraliasaidtheirshortagesweresuchthatthecountrywas’relyingontemporaryskilledmigrationtofill engineeringworkforcegaps’.It’sasimilarpositioninSouthAfricawhereengineersare beingbroughtinfromabroadtofillashortagethatispartlytheresultofhome-growntalentoptingforjobsinEuropeand Australasia.TheEngineeringCouncilof SouthAfricahasendorsedastrategyof recruitingretiredengineerstomentorand helptrainyounggraduates.

Julie Mitchell investigates the engineering skills shortage.

With a growing population placing ever greater pressure on resources and clamouring for new technology, engineers are in demand like never before. But expanding the talent pool is a global challenge.

Tomorrow’s talent


2.5m engineers needed in

Sub-Saharan Africa by 2015

Rising demandAUNESCOreport,publishedin2010,highlightstheescalatingdemandforengineersaroundtheworld.Forexample,it estimatedthat2.5millionnewengineerswereneededinsub-SaharanAfricaalonefortheregiontomeetits2015UNMillenniumGoaldeadlineofimprovedaccesstocleanwaterandsanitation.

EngineeringUKrecentlypublishedareportstatingthat,betweennowand2020,theUK neededtonearlydoublethenumberof engineeringgraduatesfrom46,000to87,000ayear,whilenumbersofthosequalifiedatadvancedapprenticeshiporequivalentneededtorisefrom27,000to69,000ayear.AllenpointsoutthatthesituationintheUKhasbeenfurthercomplicatedbythedeclineinnumberof mechanical,chemicalandsoftwareengineeringcoursesinrecentyears.Also,duetovisarestrictions,manyoftheoverseasstudentswhoareattractedtothesecourseshavetoreturnhomeatthe end oftheirstudies.

UNESCO,governments,professionalengineeringbodiesandemployersallrecognisethatthelong-termsolutionisto reach outtoschoolsearlyandinspireyoungsters,particularlymoregirls,tobecometomorrow’sengineers.Therearemanyapproachesbeingtaken,forexampletheLloyd’sRegisterFoundation,acharityandparentoftheLloydsRegistergroup,supportsarangeof educational,vocationaltrainingandresearchprogrammes.

Recruit and retainToovercomethetalentshortagesintheshortterm,employersareworkingharder– andsmarter–atrecruitingandretainingthe bestpeople.

AllensaysLloyd’sRegisterismovingmostofitsMarineLondonpersonneltoSouthampton–closetotheuniversity–whereitiscreatingaglobaltechnologycentretogrowitsowntalent.“WearedoingthesameinSingaporewithourEnergybusiness,”heexplains.“Thesecentreswillconcentrateresearchintonew technology.”

“Weneedtobemoreinnovativeinfindingtalent,”saysLloyd’sRegister’sGroupHumanResourcesDirectorJohnStansfeld.“It’snolongerenoughtoputanadvertinthepaper.

Wehavetoemploydifferentapproachestoidentifyingwherethetalentliesandthenmaketherightpropositiontothem.”

Theuseofdigitalmedia,particularlysocial siteslikeFacebookandTwitter,isbecomingmoreimportantforengagingwith‘GenerationY’.SaysAllen:“Greaterinterconnectivitymeanspeoplearebetterinformed,theycanaccesspagesontheirphoneortablettellingthemaboutLloyd’sRegisterandwhatcustomersaresaying.”

Thebusinessrecognisesthatitneedsto‘sell’itselfmore.“Lifemattersisoneofourvaluesandapowerfulcalltoarms,”Stansfeldbelieves.“Ourpeoplemakeadifferenceby providingbettersafetyoutcomes.”

Heacceptsthatfewerpeopleremainwithoneorganisationthroughouttheircareer,whichiswhyLloyd’sRegisterhelpsthem,wherepossible,todevelopandbroadentheirskills.

BMTalsoenablesitsengineerstomovearoundtheglobeandtodifferentpartsof theGroup.Ithasboosteditspayandbenefitspackagetoattracttalentedengineersandalsoexpandeditsrecruitmentpracticestoembracesocialmedia.

“Thereisnodoubtthatthewaywerecruitedinthepastisnotthewaywearerecruitingnowandinthefuture,”Segallexplains.“Wearealsopursuinglinkswitheducation.AsamemberofEngineeringUKwearekeentojoinintheireventswithschoolsandhelptosecureamorediversifiedworkforce.InSingaporeweruntalksatuniversitiesandhavelinkswithuniversitiesin theUS,wherewealsoofferinternships.”

Aspartofitscommitmenttoretainingstaff,BMTprovidespersonaldevelopmentplansandtrainingprogrammes.Thecompanyalsorunsdevelopmentcentresinwhichselectgroupsofstafffromaroundtheworldtakepartincompetency-basedexercisesandreceivedetailedfeedback.

Lookingahead,Segallisconfidentthattheengineeringcapacitysituationwilleventuallyimprove,aviewsharedbyStansfeldwhoadds:“Towinthewarontalentwehaveto marshaleverytoolintheboxandwearehavingsomesuccessingettingtherightpeopleintherightplaceattherighttime.”

Julie Mitchellisaseniorwriterspecialisingintheengineeringsector.


Accordingtothe2012annualstatisticsfromtheEuropeanWindEnergyAssociation,Europeinstalled11.6gigawatts(GW)ofwindpowercapacityin2012,bringingthetotalto105.6GW.

Theforecastfor2013andaheadislesspromisingforeconomicreasons,withthepoliticaluncertaintysurroundingsubsidies.Andaddedtothis,thewindindustryinEuropealsofacesasevereskillsshortageofaround5,500appropriatelyqualifiedstaffperyear.Longerterm,thisshortfallcouldclimbto18,000by2030–nearly5%oftheentirewindindustryworkforce–ifnumbersofsuitableworkersdonotincrease.

Thewarningcomesinareport,EuropeanWindEnergyTrainingNeeds,OpportunitiesandRecommendations,tobepublishedbytheEU’sWindEnergyTechnologyPlatform(TPWind),basedonresearchbyrenewableenergyconsultancyGLGarradHassan.

“Thereisarealriskofashortageofsuitablyskilledworkers.Welloverhalfoftheshortfallinnewworkersin2030couldbein

operationsandmaintenance,”saysAndrewGarrad,ChairmanofGLGarradHassan.“Engineersareindesperatelyshortsupplyandtheproblemwillgetfarworseunlessactionistaken.”

Thereport’srecommendationstohelpclosetheskillsgap,includebolsteringScience,Technology,EngineeringandMaths(STEM)skillsthroughschools,universities,andvocationaltraining,andmoreindustryinputintoacademiccourses.Italsocallsformorewindenergy-relatedtrainingcourses,andgreateremphasisontraininginoperationsandmaintenance.

“Targetedtrainingcoursesmustbecreatedandgraduatenumbersfromthosecoursesincreased,sothatthesectorcanmeetitsstaffneedsandcontinuetoprovidejobsandrevenueintoday’stougheconomicclimate,”commentsHenningKruse,ChairmanofTPWind.

7%Europeanelectricityiswind

(6.3/2011)

5,500Skilledemployeeshortage

+11.6Windenergyinstalled

(2012/GW)

Eu wind industry

skills gapThe EU wind energy sector is now meeting 7% of Europe’s electricity demand – up from 6.3% at the end of 2011.


ThedemandforenergyinIndiaissettorisedramatically.AccordingtotheInternationalEnergyAgency’s(IEA)latestworldoutlook,noothermajorcountryisexpectedtoseeagreaterexpansionindemandforenergyoverthenext20years,notevenChina.

Whileglobaldemandforenergyisexpectedtogrowatacompoundannualrateof1.3%until2035,India’sboomingpopulationandemergingmiddleclasswillrequire3.1%moreenergyperyear,theIEAsays.However,itsnationalthirstforenergywillneedtobesatedwithoutincreasingtheuseofitsothermostvaluablecommodity:water.Andthatwillnotbeeasy.

Thevolumeofwaterconsumedannuallyinenergyproductionwilldoubleby2035,theIEAsays,morethanhalfofwhichwillbeusedtogeneratecoal-firedelectricity(morethan80%ifyouaddbiofuels,thesecondmostwater-intensiveenergysource).Bythattime,theUNsaysmorethan1.8billionpeoplewillbe‘livinginregionswithseverewaterscarcity’.

ThatisbadnewsforIndia,hometo16%oftheworld’spopulation,butonly4%ofitswater.Equallyunsettlingisthatitsmainstay–coal-firedelectricity–isthemostwater-intensiveenergysource.By2035,theannualdemandforcoal-firedenergyinIndiawillhavejumped220%.Clearly,somethinghastochange.

“Energyandwateraretightlyentwined,”SandraPostel,DirectoroftheGlobalWaterPolicyProjecttoldNational Geographic recently.“Ittakesagreatdealofenergytosupplywater,andagreatdealofwatertosupplyenergy.Withwaterstressspreadingandintensifyingaroundtheglobe,it’scriticalthatpolicymakersdonotpromotewater-intensiveenergyoptions.”

ButinIndia,withnofewerthanseven‘energy’ministriesresponsibleforpolicy,ajoined-upstrategyisprovingelusive.

Two‘water-lite’energyoptionsaresolarandwindpower,whichcollectivelyaccountforlessthan1%ofwaterconsumedforenergy,now,andinthefuture.Neitheriscurrentlyontracktodeliverthekindofbase-loadelectricalpowerthatwillberequired.

WithmuchofIndiabaskingin300daysofsunshineannually,solarappearstobetheanswer,afactverifiedbyanofficialattherecentlaunchofthestateofKerala’sroof-topsolarpowerprogramme.

“We’reallhopingthatwe’llsoonsucceedinfindingasolution[toIndia’senergyneeds],”FarooqAbdullah,UnionMinisterforNewandRenewableEnergy,toldThe Hindu.“Thisisachallengewehavetotakehead-on.Solarenergyisourfuture.Itisratherthefutureoftheworld.”

[email protected]

energy for India?‘Water lite’

India is at an energy crossroad and, if the experts who forecast the country’s future demand are right,

it is in danger of facing the wrong way.

Daysofsun

16% 4%ofworld’spopulation

ofworld’swater

Energygrowthto2035(%)

World India

+3.1%+1.3%

300


Rebuilding trust

In April 2004 South Korea became only the fifth nation in the world to open high-speed rail services. As with the rest of the network, public trust in its operational safety was high. But the country’s first high-speed incident in February 2011 changed all that. Andrew Foulkes charts its recovery.

Thehigh-speedtrain,knownastheKTX,wasalreadydeceleratingasitapproachedGwang-myeongstation,nearSeoul,whentherearsixcarssuddenlyseparatedfromthe tracks.

Meticulouslyrehearsedproceduresensuredall147passengersweresafelyevacuatedfromthecarriagesandescortedtothestation.Onlyonepassengerrequiredmedicalassistance.

Despitethisexemplarresponse,asyoumightexpectfromoneoftheworld’smostsafety-consciousoperators,theincident

reallycouldnothavecomeataworsetimeforthenationaloperator,KORAIL.

Brand under fireEvenduringthebestoftimes,railorganisationscanbechallenging,unwieldybusinessestomanage.Butwithinterestsacrosshigh-speed,freight,nationalandcommutermetroservices,SouthKorea’snationaloperatorismorecomplexthanmost.

Likemanynationalrailways,KORAILcantraceitsrootstothe19thcenturywhentherailwayswereintroducedtotheKoreanpeninsular.SincethenthefortunesofKorea’srailwayshavefluctuatedalongsidethoseof


thecountryitself,buttodayitservesoveronebillionpassengerseachyear(placingitseventhintheglobaltableofpassengernumbers)acrossalmost3,500kmoftrack.

FromitsoriginsintheMinistryofTransportationitbecametheKoreanNationalRailroad(KNR)duringthe1960s,fromwhichthe‘KORAIL’namederives.In2005KNRwassplitintoanationwideoperator,whichcontinuedwiththeKORAILname,andKoreaRailNetworkAuthoritywhichconstructsthetrackinfrastructure.

ButinrecenttimesKORAILhasreceivedcriticismfromthosewhobelieveitsstatusasastate-ownedenterpriseisoutdated.Somehaveevencalledforprivatefirmstobeallowedtobringcompetitiontocertainservices,particularlytheprofitablehigh-speedroute.Thedebatewaspeakingwhenthederailmentoccurred.

“Followingtheincident,theKoreanmediastirredupaverynegativeimageofKORAILamongthepublic,”saysNaMin-Chan,ExecutiveDirectorofKORAIL’sSafetyOffice.“Minorfailuresandproblemswerereportedwithanincreasinglynegativeview.Thismeantrisingpublicanxietyfuelledbyminorexaggerationonsocialnetworks.”

TheentireKORAILbrandwasundercriticism.

Decisive and proactiveKORAIL’sresponseintheaftermathwasdecisive;puttingitsentiresafetymanagementprocessunderindependentreviewbyLloyd’sRegister.

Thoughitssafetysystemshadbeenbuiltfromlessonslearnedthroughoutitsprevious113years–culminatinginarecordalreadyamongstthebestintheworld(in2010itwasrankednumberoneforlowestaccidentratebytheInternationalUnionofRailways(UIC))–improvementswerestillsought.AccordingtoNa:“Wefeltstronglythatweneededtomovetoamoresustainable,proactivesafetysystem.”

YoungSangKim,Lloyd’sRegisterprincipalspecialistexplains:“Thegovernmentproposedabillforanewcertificationschemeforsafetymanagementsystems,followingtheamountofchangethattheKoreanrailnetworkhadrecentlyundergone,inparticularwithregardtosafetyonthecountry’svarioussystems–includinghigh-speed,metro,monorail

ChungChang-Young,KORAILCEO

andMaglev.Centraltothisistheaimofanewformalisedapproachinlinewithinternationalstandards.ThispassedtheNationalAssemblyinDecember2012.”

InAugust2012,KORAILenteredintoacontractwithLloyd’sRegistertoreviewitssafetymanagementsystem.“EuropeiswhererailwaysoriginatedandweknowLloyd’sRegisterplayedaleadingroleinthesafetymanagementchangesthatoccurredintheUKfollowingprivatisation,”saysNa.“Sowebelievedtheycouldperformthereviewmoreobjectivelyandcompetentlythananyotherorganisation.”

Lloyd’sRegister’steamundertookaseriesofdocumentreviews,interviewswiththeKORAILmanagement,andon-siteauditstoseewhetherthesafetymanagementsystem(SMS)wascorrectlyimplementedandfullyunderstoodtoserveitspurpose.Theirfinalreportpresented21recommendationsandsixroadmaps,fortheperiod2013–2017,whichKORAILisnowusingtoupdatecurrentprocessesandwilladdtothecorporation-widesafetymanagementmasterplantoservethebusinessthroughto2020.

“Toapplytherecommendationsnecessarytoimproveoursafetymanagementsystem,suchasthoserelatedtoSMSdocuments,occupationcompetencyandhumanfactors,wewillintroducepilotprogrammesafterdevelopingconcreteplansandconsultingwithrelateddepartments.Wewillbuildasafetymanagementsystemwhichcomplieswiththeinternationalstandardsthroughcontinuedco-operationwithLloyd’sRegister,”saysNa.

Changewasalreadyunderwayaheadofthereview.AnewSafetyOfficewascreatedinMay2011,reportingdirectlytotheCEO,withexclusiveresponsibilityforsafetymanagementacrosseveryaspectofthebusiness.ThisledtotheestablishmentofteamswithinKORAIL’sheadquartersandregionalofficesdedicatedtoverticalandhorizontalsafetyimprovementsacrosstheorganisation.

ASafetyRailwayManagementCommitteewasalsoformedtodiscussstaffconcernsandmakedecisionsonkeysafety-relatedpoliciesandissueswithKORAIL’svicepresidentasitschairperson.

Reboot gives confidence for the futureThoughmanyorganisationsimplementsuchprogrammes,fewcanmatchthespeedandimpactexperiencedwithinKORAIL.

Followingcarefulpromotionalworkto‘tellthestory’aboutthechangestakingplace,thebrandrankingofKORAILhasleaptfrom80thplacein2011to26thin2012,accordingto2012datafromBrandStock,abrandvalueassessmentcompany,aclearsignthatitisregainingthetrustofthepublic.Itsreputationasasafeoperationwasconfirmedbythe2012InnovationAwardpresentedtothedelegationduringtheUIC’sannualgeneralmeetinginParis.

Asaresultoftherebootofitssafetymanagement,KORAILhasrenewedconfidenceforthefuture.“Koreansocietyrecognisesthatrailisanefficientandenvironmentallyfriendlyformoftransportationandourgovernmentisexpectedtogreatlyincreaseitsinvestment,”saysChungChang-Young,KORAILCEO.“WearegeographicallypositionedasthepotentialstartingpointofanetworkthatstretchesfarintotheAsiancontinent.Itisimportanttousthatwecontinuetoimproveoperationsandprocesses,especiallyinsafetymanagement,andremainatthetopasthesafestandmostefficientoperationthereis.”

Andrew FoulkesisLloyd’sRegister’sTransportationCommunicationsManager.

[email protected] me@andrewfoulkes_LR


Best practice and innovation are driving food safety across global supply chains, says Cor Groenveld.

A KEY TO FOOD SAFETYAuDITOR COMPETENCY

1.8mdieeachyeardue

tocontaminatedfoodandwater

162bnUS$coststoeconomyand5,000deathsduetofood

borneillnesses

Foodsafetyisnotacompetitiveissue.Itisintheinterestsofstakeholdersacrosstheglobalfoodsupplychaintoworktogether

toensurethatconsumersareconfidentthatfoodissafetoeatandhasbeenproducedinasustainablemanner.

Theglobalisationofsupplychainsandtheneedfortransparencyandtraceabilityhavetriggeredchangesinthewayinwhichfoodsafetyisapproached.Overthelastdecadetherehasbeenacollaborativeapproachacrossthemajorstakeholdersresultinginbestpracticebeinghighlightedandshared,mediocritybeingmoreeasilyidentifiedandexcellencemorereadilyrewarded.

Thankstoinnovation,collaborationandchange,theincreasedfocusonfoodsafetyacrosstheglobalsupplychainhasledtosignificantimprovements.However,thereismoretobedone;thenumberscurrentlyinvolvedinfoodsafetystatisticsspeakforthemselves:some1.8millionpeopledieeachyearbecauseofcontaminatedfoodandwater;eachyearthereareanestimatedtwobillioncasesoffoodborneillnessesand,inWesterndevelopedcountries,anestimatedoneoutofeveryfourtosixpeoplesufferfromafoodbornedisease;whileintheUS,foodborneillnessescauses5,000deathsannuallyandUS$162billioncosts.

Toaddressthesefiguresandtomitigaterisksthefoodsectorincreasinglyreliesontheindependentassessmentindustry,notjusttoprotectbrandsandbusinessesfromprosecutionsandhealthscares,butalsotodriveinternalimprovementsandsecurecompetitiveadvantage.

Driving innovation from the topIn2000,leadingglobalmanufacturersandretailersunitedtoformtheGlobalFoodSafetyInitiative(GFSI),primarilytodrivetheharmonisationoffoodsafetystandardsandcertification.Themovefollowedanumberoffoodsafetycriseswhenconsumerconfidencewaslow.

Sincethen,expertshavebeencollaboratingtotacklecurrentfoodsafetyissuesdefinedbyGFSIstakeholders.AlongwiththeInternationalOrganisationforStandardisation(ISO),theGFSIhasdriventhemovetowardsamanageablesetofgloballyacceptedmanagementsystems-basedstandardsandschemes.ThisharmonisationofstandardshasbeenoneofthetwomostsignificantachievementsoftheGFSI,andakeyinnovationindrivingfoodsafety;thesecondsignificantachievementisthefocusonauditorcompetency.

Competency and consistencyWhilerobustindependentassessmentunderpinsanorganisations’commitmenttofoodsafety,thereisaneednowforthose


carryingouttheassessment–theauditorsthemselves–tohaveaconsistentlevelofexperienceandexpertise.Thisisknownas‘calibration’withintheindustry.

Robustauditsandthecalibrationofauditorsarebothfundamentallyimportanttoensuringtheintegrityoftheassessmentprocess.Thecalibrationofauditorsensuresthesamelevelofauditingacrossinternationalboundaries.Thebenefitstoglobalorganisationsareclear;calibrationassuresthemthattheirassessmentreportshavebeencompletedinaconsistentwayandthattheiroperationsareconformingtotherelevantstandardorscheme–irrespectiveofgeographicallocation.Thisgivesanadditionallevelofassurancetoorganisationsandthewiderglobalfoodsupplychain.

MarkOverland,DirectorforGlobalCertificationatCargillendorsedthispoint:“WearerollingoutFSSC22000toover1,000plantsin67countries.Havingthesameleveloffoodsafetyexecutionateveryplantisanexpectationfromourcustomers.”WhatisbecomingincreasinglyapparentisthatorganisationslikeCargillaretakingaglobal,integratedapproachtosupplychainandfoodsafety,includingtheirworkbothupanddownthechain.

Customised auditsAnotherdevelopmentistheincreasinguseofcustomisedsecondpartyauditsbyorganisationsseekinginternalimprovementoftheirfoodsafetymanagementsystemortoassuretheirsupplychain.Thisapproachallowsanorganisationtoworkwithacertificationbodytodevelopabespokemanagementsystemandauditapproachthatnotonlyincludesthecertificationauditsagainstarecognisedstandardor

schemebutalsoincorporatesindustrybestpracticewithcompanyspecificsystemsand processes.

Assessorcalibrationisalsoattheheartofsecondpartyauditprogrammesanditcandeliverasignificantreturnoninvestment.Throughregularassessor-clientmeetingsandtrainingsessions,bothpartiesworktogethertoensurethatsystemsandprocessesareassessedinaconsistentmanner,regardlessoflocationorassessor.Inadditiontothesystembecomingmorerobustovertime,theauditprocessbeginstodriveinternalefficienciesaswellasidentifyareasforfurthertrainingand improvement.

Someoftheworld’sleadingorganisationshaveturnedtocustomisedassuranceprogrammes.Auditsareundertakenbyskilledandcalibratedassessorsthatcoverallrequirementsandprocessesthatarerelevantfortheorganisation,resultinginreportingthatvisualisesthelevelofcomplianceandenablestheorganisationtoimprove.

AsCathyStannard,GlobalHeadofQuality&FoodSafetyManagementofMars,Incorporatedrecentlyexplained:“ForMars,aQualityManagementProgrammecompatiblewiththerequirementssetoutintheGFSIrecognisedschemesoffersusconsistencyandefficiency,whichhelpsacrossthesupplychain.”

Whatevermethodologies,processesandsystemsareused,theintegrityoftheauditultimatelydependsontheexpertise,experience,training,knowledgeandinsightoftheauditingteam.Auditorstoday,workinginglobalmarkets,notonlyneedtobecalibrated,theyneedtherighttoolsto

dothejob–andthismeanstheyneedcontinualtraininganddevelopment.

Amanagementsystems-basedapproachtofoodsafety,combiningharmonisedglobalstandardsandconsistent,robustassessment,isleadingtoincreasedconsumerconfidenceintheglobalfoodsupplychain.Whileriskisalwaysgoingtobeafactorinanysupplychain,thisapproach,basedoncollaboration,trust,innovation,andtheleadershipofexemplaryorganisationsservingthefoodindustryishelpingtoensurethatissuescanbequicklyidentifiedandcorrected.

Manufacturersandretailersthatmayhaveconsideredimprovedefficienciesasthemainindicatorforsuccessarenowputtingmanagementsystemsattheheartoftheirorganisationstomanagetheirsupplychainrisks.This,inthesetimesofon-goingfoodscaresandeconomicuncertainty,canprovetobeakeydifferentiatorandanon-goingsourceofcompetitiveadvantage.

FSSC22000isacompletefoodsafetymanagementcertificationschemebasedonISO22000andsectorspecifictechnicalspecificationsforprerequisiteprogrammes.

Cor GroenveldisChairmanoftheFoundationforFoodSafetyCertificationandGlobalHeadofFoodSupplyChainServicesforLloyd’sRegisterQualityAssurance(LRQA).www.linkedin.com/in/corgroenveld

Follow us@LRQAFood


AcuttingedgedrillshiphasbeendesignedbyajointdevelopmentprojectbetweenHyundaiHeavyIndustries(HHI)andLloyd’sRegister.

TheHD12000meetsmarketdemandandowners’higherexpectationsaftertheDeepwater Horizonincident.Itcandrilltodepthsof12,000feetandhasgreaterstrength,spaceandversatilitythanitsdrillshippredecessors.The223metrelongvesselisdesignedtomeetthegreatercomplexity,pressuresandsizesoftoday’sdrillingequipmentandtheirhandlingneeds.Itcanalsoprobetodepthsof40,000feet.

Thevesselhasahightransitspeedof11.5knotstogetherwithreducedformresistancewithintegratedthrusterpodtohull.Ithas40%lowerfuelconsumption,reportedly,thanexistingdrillshipsandenhancedseakeepingperformance.

Drillship takes the leadN

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AcclaimedindustryveteranRSSharmahasjoinedLloyd’sRegisteratatimewhenwearecommittedtodoublebothourrevenueandworkforceinIndiaby2015.AsChairmanofOperationsforSouthWestAsiahewillsupportourambitiousplansintheenergyandtransportsectors.

“WearecommittedtogrowingourbusinessinIndia–organicallyandinorganically–toexpandtheindependenttechnicalsupportwecanoffertotheownersandoperatorsofthecriticalassetsthatIndiansocietydependson,”saidRichardSadler,CEOofLloyd’sRegister.

E [email protected]

Sharma joins the group


Statnett’s asset management excellence

Life on-board is tough, say seafarers

Vodafone Greece business continuity management certifiedVodafone,thefirstcompanyinGreecetobecertifiedtotheinternationalbusinesscontinuitymanagementsystemstandard,BS25999,hasalsobeencertifiedtoISO 22301–thenewinternationalstandardforbusinesscontinuitymanagement.BothcertificationswereawardedbyLloyd’sRegisterQualityAssurance(LRQA).

DionysisGrigoratos,BusinessCommercialDirectoratVodafonesaid:“VodafoneGreecehasbeeninstrumentalinprovidinghighqualityintegratedtelecomandITsolutionsthatincreaseproductivityandcompetitiveness.Businessesrelyonour

Thedesignofashipcriticallyimpactstheworkinglivesofseafarersinanumberofways,suchasthequalityofrest,thelevelofrestorationtheycanachieveinnon-workinghoursandtheirmentalwell-being.Yetthedesignofvesselaccommodationisanareawhichcanreceivescantattentionacrosstheindustryandasaresultahighdegreeofvariabilityexists.Thisobservationisoneofanumberoffindingscontainedinastudy,SeafarerAccommodationOnContemporaryCargoShips,undertakenbyCardiff-basedSeafarersInternationalResearchCentre(SIRC)withfundingfromLloyd’sRegisterFoundation.

AcopyofthereportcanbefoundontheSIRCwebsitewww.sirc.cf.ac.uk

StatnettSF,basedinOslo,NorwayhasbeencertifiedtothePubliclyAvailableSpecification(PAS55)frameworkforassetmanagementsystemsbyLloyd’sRegister.StateownedStatnettisthenationaltransmissionsystemoperatorresponsibleforthemainelectricitytransmissiongridthroughoutNorway.

Itsassetportfolioconsistsofapproximately10,000kmofhighvoltagetransmissionlines,around140majortransformerandconnectorstations,anassociatedtelecommunicationsnetworkandanumberofreservepowergeneratorstations.StatnettisalsoakeyelementwithintheNordicPowerSystemandhasinterestsininternationalHVinterconnectorsbetweenNorwayandothercountriesintheNordicPowerSystemaswellasothercountriesoutsideofthisgroup.

Aspartofthecertificationassessment,ourteamtravelledtonorthNorwaytoinspectmaintenanceactivitiesandtoFordeinwestNorwaytoinspectworktakingplaceontheconstructionof300kmofoverheadline,whichrequiredthemtoflybyhelicoptertosomeofthemoreremotelocations.

[email protected]

ISA for Taiwan high-speed rail extension TheTaiwanHighSpeedRailwayCorporation(THSRC)haschosenLloyd’sRegisterastheindependentsafetyassessor(ISA)fortheNangangextensionofitsnetwork.“WearepleasedtocontinuethissuccessfulrelationshipwithLloyd’sRegister,whichbeganin2000whenourrailwaywasthefirstprojectinTaiwantoundergoanindependentverificationandvalidationprocess,”THSRCChairmanandChiefExecutiveOfficer,OuChin-dersaid.“Ibelievethatindependentassessmentisthekeytotheoverallsuccessofaproject.Itistheonlywaytoensurethatsafetystandardsaremaintainedthroughouttheconstructionandoperationofasystem.”

E [email protected]

servicesandtheVodafonenetworkbecausetheywantseamlesscommunicationandnewwaysofworkingtobeabletocontinuouslymeetmarketdemands.”

“AchievingcertificationtoISO22301withLRQABusinessAssurancehasdrivencontinualimprovementacrossournetwork,”saidGrigoratos.“Thisdemonstratesouron-goingcommitmenttoourcustomersthroughtheprovisionofreliableandhighqualityservices.”

[email protected]


Propelling innovationThepriorityweplaceonresearchanddevelopmentmeanswecanleadandworkonthelatestinnovations.Wearesupportingthedevelopmentofnewconceptsandtechnologiesthatwillplayavitalroleintheimmediateandlong-termfutureofshippingandenergy.

Learnmoreaboutourglobalnetwork–gotowww.lr.org

Lloyd’sRegisterisatradingnameofLloyd’sRegisterGroupLimitedanditssubsidiaries.Copyright©Lloyd’sRegisterGroupLimited2013.

Issue of Insight

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