MIMA / Marine Dept of Malaysia MIMA / Marine Dept of Malaysia World Maritime Day LuncheonWorld Maritime Day Luncheon

””International Shipping – Carrier of World International Shipping – Carrier of World Trade”Trade”

ByByJohn C. Fawcett-EllisJohn C. Fawcett-Ellis

General Counsel & Regional Manager Asia-PacificGeneral Counsel & Regional Manager Asia-Pacific

Kuala Lumpur, 24 September 2005Kuala Lumpur, 24 September 2005

90% of the world’s trade is move by ship90% of the world’s trade is move by ship 50,000 merchant ships trading internationally50,000 merchant ships trading internationally Some 1,000,000 crewSome 1,000,000 crew World fleet registered with some 150 different World fleet registered with some 150 different

flag statesflag states Total freight some USD 380 billion (5% of total Total freight some USD 380 billion (5% of total

world trade)world trade)

                                    

                 

www.shippingfacts.comwww.shippingfacts.com

INTERTANKO’s vision for the tanker industry:

“ A responsible, sustainable and respected industry able to influence its own destiny.”

                     

                                    

AS AN INDUSTRY WE MAY NOT BE LOVED BUT WE ARE NEEDED

• World Oil World Oil Consumption 3.6 Consumption 3.6 billion tsbillion ts

• Transported by sea Transported by sea 2.2 2.2 billion tsbillion ts

• 6060% transported by sea.% transported by sea.

The world needs tankersThe world needs tankers

Regular supply critical Regular supply critical

Tanker incidents: 1978-03

Source: LMIS, Informa, press, INTERTANKO

Number

0

200

400

600

800

1000

78 80 82 84 86 88 90 92 94 96 98 00 02

Grounded

War

Misc

Hull&Machinery

Fire/Expl

Collision

Development of tanker oil spills

Source: ITOPF. Number of spills above 700 tonnes.

Accidental oil pollution from tankers and tanker trade

Source: ITOPF, Fearnleys

1000 bn tmm ts spilt

0,0

0,7

1,4

2,1

2,8

3,5

1970s 1980s 1990s PR00s

0

22

44

66

88

110

132

m ts spilt

'0000 bntonne-miles

AGENDA Maintaining Supremacy of IMO & International Maritime Law

Common Structural Rules & Goal Based Standards

Criminalisation of Seafarers

Challenges to Industry Governance Structures

Other:

People issues Piracy

Ship Recycling Environmental Challenges

Competition Rules Security

Oil Pollution Liability (& Compensation)

Maintaining Supremacy of IMO & International Maritime Law

Against the challenges of Local and Regional Legislation

Increasing politicization of Increasing politicization of regulationregulation

Examples:Examples: Phase out of single hull tankersPhase out of single hull tankers West European Particularly Sensitive Sea Area West European Particularly Sensitive Sea Area Moves to open up CLC/Fund Convention and link Moves to open up CLC/Fund Convention and link

with substandard shippingwith substandard shipping Penal sanctions adopted by EU, criminalising Penal sanctions adopted by EU, criminalising

accidental pollutionaccidental pollution

Why? Why? Coastal state interests versus flag states, and Coastal state interests versus flag states, and

reduced influence of maritime constituencyreduced influence of maritime constituency Power of EU Commission Power of EU Commission

Commission (The executive)

THE EUROPEAN INSTITUTIONSTHE EUROPEAN INSTITUTIONS& the power plays& the power plays

EuropeanParliament

(Direct election)

Council(Member States)

EMSA

HOW IT WAS: HOW IT WAS: Examples of positive regulatory developments Examples of positive regulatory developments

(the “IMO spirit”)(the “IMO spirit”)

ISM Code and STCW (training)ISM Code and STCW (training) post ‘Estonia’ passenger ferry measurespost ‘Estonia’ passenger ferry measures IMO bulk carrier safety packageIMO bulk carrier safety package Development of ILO ‘Super Convention’Development of ILO ‘Super Convention’

Outcomes broadly based on technical merits Outcomes broadly based on technical merits of arguments put forward. of arguments put forward. Industry viewpoint understood, if not always Industry viewpoint understood, if not always accepted.accepted.

HOW IT IS: HOW IT IS: The Challenges TodayThe Challenges Today

More political drivers and less consideration of the More political drivers and less consideration of the technical, operational, and commercial intereststechnical, operational, and commercial interests

More unworkable, inconsistent and illogical regulation and More unworkable, inconsistent and illogical regulation and less consideration of the practical aspectsless consideration of the practical aspects

More pressure for local / regional regulation and less More pressure for local / regional regulation and less willingness to adopt and apply international regulationwillingness to adopt and apply international regulation

Maintaining Supremacy of IMO & International Maritime LawMaintaining Supremacy of IMO & International Maritime Law

What are the threats?What are the threats?

15 Years Ago the United States (OPA90)15 Years Ago the United States (OPA90) Today the European UnionToday the European Union Politics post Erika and PrestigePolitics post Erika and Prestige Conflict with International legislation Conflict with International legislation

(UNCLOS, MARPOL)(UNCLOS, MARPOL) CriminalisationCriminalisation EU Commission proposals for EU Common EU Commission proposals for EU Common

Position at IMOPosition at IMO

Maintaining Supremacy of IMO & International Maritime LawMaintaining Supremacy of IMO & International Maritime Law

International Regulation for an International IndustryInternational Regulation for an International Industry

What the industry seeks from the Asian region: What the industry seeks from the Asian region:

Consistent support for IMO and the international Consistent support for IMO and the international approachapproach

Rejection of regional initiativesRejection of regional initiatives If possible, avoidance of “block” voting to If possible, avoidance of “block” voting to

combat EU moves in this directioncombat EU moves in this direction

Criminalisation of Seafarers

CRIMINALISATIONCRIMINALISATION

Traditionally accidents have been regarded as quite distinct from Traditionally accidents have been regarded as quite distinct from deliberate actsdeliberate acts

Attitudes have changed (scapegoat mentality)Attitudes have changed (scapegoat mentality) e.g. Captain Mangouras, The Karachi Eight e.g. Captain Mangouras, The Karachi Eight

EU Directive on Ship-Source Pollution (despite wide industry EU Directive on Ship-Source Pollution (despite wide industry coalition)coalition)

Canadian Bill C-15Canadian Bill C-15

US approach (whistle blowing, enormous fines and rewards)US approach (whistle blowing, enormous fines and rewards)

CriminalisationCriminalisation INDUSTRY supports the investigation and prosecution of illegal INDUSTRY supports the investigation and prosecution of illegal

discharges of oil from ships.discharges of oil from ships.

INDUSTRY strongly objects to criminalising accidental oil pollution INDUSTRY strongly objects to criminalising accidental oil pollution and to treating seafarers as criminalsand to treating seafarers as criminals

Any criminal offence of pollution from a ship must be clearly Any criminal offence of pollution from a ship must be clearly defined and in accordance with international law.defined and in accordance with international law.

Any penalties imposed on someone found guilty of such an offence Any penalties imposed on someone found guilty of such an offence must be proportionate. must be proportionate.

There should also be parity with any penalties imposed for There should also be parity with any penalties imposed for pollution from land based sources.pollution from land based sources.

Any suspects must be treated fairly, impartially and in accordance Any suspects must be treated fairly, impartially and in accordance with international law on human rights.with international law on human rights.

CriminalisationCriminalisation

Additionally Additionally

INDUSTRY expects coastal states to comply with their INDUSTRY expects coastal states to comply with their existing treaty law obligations to provide adequate, existing treaty law obligations to provide adequate, affordable, oil waste reception facilities.affordable, oil waste reception facilities.

In order to safeguard the lives of seafarers and the In order to safeguard the lives of seafarers and the marine environment, INDUSTRY urges coastal states to marine environment, INDUSTRY urges coastal states to ensure proper contingency plans are put in place so ensure proper contingency plans are put in place so that adequate assistance and if necessary a place of that adequate assistance and if necessary a place of refuge can be made available to a ship in distress.refuge can be made available to a ship in distress.

Challenges to Industry Governance Structures:

Flag

Classification Societies

Port State Control

P&I Clubs

The good, the bad and … all The good, the bad and … all legitimatelegitimate

Flag State GuidelinesFlag State Guidelines- industry advice- industry advice

Challenges for Flag:Challenges for Flag:

IMO Flag State Audit (currently voluntary but pressure IMO Flag State Audit (currently voluntary but pressure to make mandatory) to make mandatory)

Port State Control Port State Control - Currently: white, black and grey lists - Currently: white, black and grey lists - EU moving to target non-audited flags with - EU moving to target non-audited flags with

preferential treatment measurespreferential treatment measures

Political, public, union and media pressures – Political, public, union and media pressures – especially on open registersespecially on open registers

Industry currently providing guidance / Industry currently providing guidance / recommendations, and moving to do morerecommendations, and moving to do more

Challenges for Classification Challenges for Classification Societies:Societies:

EU Challenge on Role of Class EU Challenge on Role of Class – – perceived conflict of interest between statutory and perceived conflict of interest between statutory and

classification activitiesclassification activities

Common Structural RulesCommon Structural Rules – – ability to deliver while maintaining IACS harmony ability to deliver while maintaining IACS harmony

Role relative to Goal Based Standards Role relative to Goal Based Standards – – IMO/Flag states versus IACS control of Goal Based StandardsIMO/Flag states versus IACS control of Goal Based Standards

Who sets class agenda – owners, builders, flag states or class Who sets class agenda – owners, builders, flag states or class managers ?managers ?

Example coatings standards (IMO – DE discussion)Example coatings standards (IMO – DE discussion)

Challenges for Port State Control (PSC)Challenges for Port State Control (PSC)

What is needed :What is needed :

Better harmonisation and consistency of standards, training, etc. Better harmonisation and consistency of standards, training, etc. across all PSC regimesacross all PSC regimes

Consistency in inspection and targeting criteria – Consistency in inspection and targeting criteria – based in part on based in part on analysis of PSC records and not arbitrary mechansisms, such as quota analysis of PSC records and not arbitrary mechansisms, such as quota systems systems

Global sharing and mutual recognition of records between MoUs, Global sharing and mutual recognition of records between MoUs, with with data logged in central system such as EQUASISdata logged in central system such as EQUASIS

Uniformity in internal procedures, Uniformity in internal procedures, such as clear grounds for detention, such as clear grounds for detention, independent appeal panels, close-out of deficiencies, etc. independent appeal panels, close-out of deficiencies, etc.

&&

To ensure that the integrity of PSC is maintainedTo ensure that the integrity of PSC is maintained

Challenges for P&I ClubsChallenges for P&I Clubs& Club Boards:& Club Boards:

OECD Report – Role of P&I in respect of substandard OECD Report – Role of P&I in respect of substandard shippingshipping

IOPC Revision ProceduresIOPC Revision Procedures

Pending Compulsory Insurance requirementsPending Compulsory Insurance requirements

Who manages the agenda Who manages the agenda – – Shipowners or Club Managers ?Shipowners or Club Managers ?

PEOPLE ISSUESPEOPLE ISSUES(HUMAN FACTORS):(HUMAN FACTORS):

Heavy recent concentration on Heavy recent concentration on “hardware” issues“hardware” issues

(e.g. accelerated phase-out, CSRs, (e.g. accelerated phase-out, CSRs, goal-based standards etc)goal-based standards etc)

Yet people still “cause” most incidentsYet people still “cause” most incidents

PEOPLE ISSUESPEOPLE ISSUES(HUMAN FACTORS):(HUMAN FACTORS):

Industry has to address :Industry has to address :

Shortages of qualified officers (BIMCO/ISF 2005)Shortages of qualified officers (BIMCO/ISF 2005)

Renewed criticisms of training standards (time Renewed criticisms of training standards (time to to review STCW 95 ?)review STCW 95 ?)

Implications/causes of fatigue (ISPS etc.)Implications/causes of fatigue (ISPS etc.)

Manning levelsManning levels

• Extent of the problem• Focus of attention on Regions - Malacca Straits - Somalia - West Africa• Developments

Piracy/Armed Sea Robbery:Piracy/Armed Sea Robbery:

Security in the Straits: The Security in the Straits: The need to tackle:need to tackle:

A.A. The RealityThe Reality

B.B. The PerceptionThe Perception

The Reality:The Reality:

Attacks have become more violentAttacks have become more violent Attackers have become bolder – large Attackers have become bolder – large

ships attackedships attacked Attacks are motivated by financial gain not Attacks are motivated by financial gain not

for political reasonsfor political reasons The Straits are a crucial route for the The Straits are a crucial route for the

world’s shipping therefor the area is world’s shipping therefor the area is uniquely sensitiveuniquely sensitive

The Reality (cont):The Reality (cont):

MSSIMSSI The Batam StatementThe Batam Statement Tripartite Techical Experts Group on Tripartite Techical Experts Group on

safety of navigationsafety of navigation Tripartite Technical Experts Group on Tripartite Technical Experts Group on

security in the Straitssecurity in the Straits The Jakarta StatementThe Jakarta Statement Increased CooperationIncreased Cooperation

Reality?Reality?

More patrols?More patrols? Better coordination of resources to tackle Better coordination of resources to tackle

the root of the problem, i.e. ashore?the root of the problem, i.e. ashore? Cross boarder patrols – bilateral Cross boarder patrols – bilateral

agreements? Indonesia-Malaysia – up to 5 agreements? Indonesia-Malaysia – up to 5 miles?miles?

””Eyes in the sky” – is this 24/7?Eyes in the sky” – is this 24/7?

The perception:The perception:

Is enough being done?Is enough being done? Lack of clarity on the recent initiatives? Lack of clarity on the recent initiatives?

What is in place and what is proposed?What is in place and what is proposed? That the listing of the region as a ”war That the listing of the region as a ”war

risk” area has brought a reaction from the risk” area has brought a reaction from the littoral stateslittoral states

INTERTANKO’s view:INTERTANKO’s view:

Recent initiatives must be built uponRecent initiatives must be built upon Support the role of the IMO as a facilitator Support the role of the IMO as a facilitator

of open discussionsof open discussions Welcomed the open dialogue in JakartaWelcomed the open dialogue in Jakarta Better accessibility of information on the Better accessibility of information on the

initiatives taken – transparency is crucialinitiatives taken – transparency is crucial Support the political advance in Support the political advance in

internationalising the issueinternationalising the issue

JWC – Listed AreasJWC – Listed Areas

JWC should consult more widelyJWC should consult more widely Review their decision on the basis of the Review their decision on the basis of the

factual situationfactual situation Follow closely all initiatives by the littoral Follow closely all initiatives by the littoral

statesstates

In conclusion:In conclusion:

The shipping industry is vital to the global economy. All those involved in the shipping industry must strive for

an industry that is:

a) Responsibleb) Respected

c) Sustainabled) Able to influence its own destiny

Ship operators alone cannot Ship operators alone cannot safeguard the marine safeguard the marine

environmentenvironment

All parts of the shipping industry All parts of the shipping industry must be responsible and seek to must be responsible and seek to

continuously improvecontinuously improve

Designers Shipbuilders Equipment Suppliers

Class

Charterers Operator/Manager

Financiers / Guarantors

Owner

Commitment to Continuous Improvement by all stakeholders in the maritime businesses

Cargo Owners BrokersP&I Hull insurers

Ports & Terminals

Coastal StatesWaterways authorities

Flag states

Bunker suppliers Pilots Tug operators Labour providers

Salvers RepairersPaint Suppliers Agents

Spill Response Ship Breakers

Tanker Event 2006Tanker Event 2006

SingaporeSingapore

29-31 March 200529-31 March 2005

The Poseidon ChallengeThe Poseidon Challenge

And finally:And finally:

It is our seafarers to whom we are indebited, It is our seafarers to whom we are indebited, it is their dedication and professionalism it is their dedication and professionalism

often in the face of adversity that deserves often in the face of adversity that deserves our whole hearted appreciation. We salute our whole hearted appreciation. We salute

them.them.

Thank youThank you

www.intertanko.comwww.intertanko.com