Shipping Industry Glencore

JULY/AUGUST 2007 ISSUE 8 SHIP MANAGEMENT INTERNATIONAL3

16 Cutting the heartout of the tanker market

COVER STORY SHIPMANAGEMENT FEATURES

T H E M A G A Z I N E O F T H E W O R L D ’ S S H I P M A N A G E M E N T C O M M U N I T Y ISSUE 8 JULY/AUGUST 2007

NOTEBOOK

6 STRAIGHT TALK - Could the last one out please turn off the lights?

8 Shareholders profit on the backof AESM sale

9 Fleet chief slams sale rumourFleet Management has moved to quash mar-ket speculation that it is about to be sold

OnTheRecordTor Svensen, Chairman of IACS

OverheardBurghelle-Vernet, Head of the EC MaritimeSafety Unit, outlines his zero-tolerancevision

11 World’s ‘largest’ simulator is installed

Schulte claims business as usual

13 Interorient ‘now an owner’The Cyprus-based company has seen anexplosion in its shipowning activity in recentyears and has a proud orderbook to match

Off the cuffHoegh LNG boss,Sveinung Stohle, runsthe rule over third partymanagers

14 Harry steps on the gasStealthGas is set to raise in excess of $120million from the stock market to helpfinance its recent influx of new vessels.

Bleeding rumours!"haemorrhaging crew down in thePhilippines"

22 How I WorkSMI talks to an industry achiever and asks the question: How do you keep up with the rigours of the shipping industry?

52 RegulationOnce stung, twice as determinedBrussels is so resolute in realis-ing its goal of a single voice forEuropean shipping that it willnot refrain from pushing for Community observerstatus at the IMO, even if this is against the wishes ofthe majority of the EU member states

57 RegulationDo third party managers get paid fairly for what

they do?

76 On my mindDr Alkis J. Corres - Chairman of the Hellenic Association ofMaritime Economists, DirectorISMT Services, Ability &Knowledge MetricationOrganisation and Director Newbuildings, NaftotradeShipping & Commercial

DISPATCHESDISPATCHESS P E C I A L R E P O R T

plus 20 Vetting - hurdle or opportunity?

REGIONAL FOCUS

Greece28 Bagging the riches is more than awaiting gameWith 1,200 owners controlling a fleet of over 167mdwt, Greece is a hot hunting ground for third partymanagers hoping to bag a ship or two. But beware...

Cyprus36 Surival of a superpowerCan Cyprus keep pace with the international demandsof modern shipmanagement or is the Mediterraneansuperpower set to decline as its once loyal subjects startto vote with their feet?

SHIP MANAGEMENT INTERNATIONAL ISSUE 8 JULY/AUGUST 20074

LIFESTYLE

92 Dortmund DevilGerman tuners have created theworld’s fastest soft-top from theskin of a Porsche 911. The 9ffTRC 91 is a symphony inmotion and can even tame theAutobahn. Andy Pierce takes adrive on the dark side

94 PromsThe BBC Proms is evolving but its global feel is nothing new

BUSINESS VIEWPOINT

88 Getting PersonalThe most amazing thing about my visit to Charles R. Weber’s officesin downtown Piraeus was that Roman Abramovich’s yacht Peloruswas moored right outside the front door. In fact that was how BasilMavroleon told me to recognise his office

71 What I’m readingWith Ugo Salerno, Chief Executive Officer,Rina plus reviews of TANKER: TheHistory and Development of Crude OilTankers, Little Green Book of GettingYour Way and Getting the Goods:Ports, Labor, and the LogisticsRevolution

BOOK REVIEW

MARKET SECTOR

84 Flag state audit: necessity or purelyMachiavellian?Europe wants compulsoryaudits on EU flag states butdoes this smack of unilateralism gone too far?

DISPATCHES

62 Nuclear falloutShipping is targeted asUN fights Iran’s WMDthreat. Thomas Landreports from theInternational AtomicEnergy Agency in Vienna

67 Tit-for-tat is a game worth playingIn the dog-eat-dog world of third party shipmanagement, the majorplayers are jockeying for position in an environment where only thebiggest or the best will survive

47 Korean yeards win in homogeneity stakes

NEWBUILDING

83 Compliance alone is not enough in tanker management

INSIDERBUSINESS OF SHIPPING

58 AdHocSpit it outShipbuilding gets a Carribean flavourTrot-on, trot-offFree video sets pulses racingFredriksen FC?Publish and be damned!Managers put to the testThought Provoking

73 A Volte-Face on CompetitionCompanies operating in Europe probably value certainty aboveeverything else in terms of the regulatory and legal environment.Risk management is only possible where there is a clear set of rules.This Franco-German intervention has muddied the rules, at least forthe time being

LIVE

74 Objects of desireGet yourself geared up for the summer

SHIP REPAIR

44 LNG - The dash for gas By Alan Thorpe

TRADE ANALYSIS

26 Dun & Bradstreet Country Riskline report for Greece

48 Towage & SalvageSalvors on green offensive

78 Shortsea ShippingInvestments across a broad front


The Shipping BusinessMagazine today’s owners andmanagers have been waiting for

T he biggest non-event in shipmanagementtook place at the beginning of June when itwas publicly-announced that third party

shipmanagers were on the fiddle. It was a non-event because the claim is as old as the trees andalso what do you expect if the selection criteria isbased on how much a ship manager charges forhis services rather than what an owner actuallygets for the management fee he pays?

There will always be a temptation to make aquick buck on the mark-up. It's not condoned, butjudging by the rate-cutting and margin-squeezingpractices carried out daily by all sectors of theshipping industry, surely it's more a matter of if you can't beat them then at least make sure you are the first to nab the crumb falling from the table.

The ‘illicit practices’ assertion in the tradepress caused ripples. There was no doubt aboutthat. After all, scandal sells newsprint but remem-ber, today's newspaper is tomorrow's fish andchip wrapper. And don't think I am here to beatthe drum of the substandard ship manager,because I'm not. Similar to those upstanding qual-ity-conscious and fully-resourced members of thethird party shipmanagement fraternity, anythingthat fails to deliver the minimum standarddemanded by the market should not expect tocome to the party. After all, isn't that what self-assessment is all about.

I think the time has come for us all to considerthe situation objectively. One manager I spoke tosummed the situation up perfectly when he said:"In times of poor freight rates, we struggle to getthe ships. In time of freight rate largesse, we don'tget higher management fees, we just get moretonnage offered to us." And he's right. Owners arenot unique in wanting something for nothingthemselves, but we need to get rid of this feelingof resentment; of this 'because I need you, doesn'tactually mean I like you', attitude.

Some owners are the first to boast about driv-ing down management fees. Indeed we haveheard of managers being paid as low as $60,000

per ship per year. But calculated on an hourlyrate, these unfortunate shipmanagement practi-tioners are being paid a paltry £3.42 per hour. Orto put it bluntly, 36% lower than the UK mini-mum wage of £5.35 per hour. So let me get thisright. Some owners will pay their office cleanersover a third more than the company they haveentrusted to look after the prized $150 millionasset – an asset that if operated badly could causedeath and environmental devastation and couldcompletely ruin even the largest shipping organi-sation. Hmmmmn. Something wrong here.

Whether the shipping industry likes it or nor,substandard shipping has had its day. The charter-ers, the markets and the regulators are seeing tothat. But this increase in legislation and theheightened fears over crew shortages havebrought an understanding of the qualities of thirdparty managers to the fore. Surely the time hascome for owners and managers, customers andservice providers, to better appreciate each otherand help each other achieve the levels of qualitythey both know they are capable of. Ship man-agers need to shed their petty competitive prac-tices and embrace an open policy of best practiceto further the quality image of their industrywhile ship owners need to acknowledge the valueof what they are receiving and take a more realis-tic stance on management fees.

Oscar Wilde described a cynic as a man whoknows the price of everything and the value ofnothing. The only cynics around here if the indus-try fails to value what it has to offer will be theregulators and the seafarers who will start believ-ing that shipping's image may not be all itscracked up to be.

Sean Moloney

STRAIGHT TALK

Printed in the UK by Cambrian Printers. Although every effort hasbeen made to ensure that the information contained in this publi-cation is correct, Elaborate Communications accepts no responsi-bility or liability for any inaccuracies that may occur or their con-sequences. The opinions expressed in this publication are not nec-essarily those of the publishers. All rights reserved. No part of thispublication may be reproduced whole, or in part, stored in aretrieval system or transmitted in any form or by any means with-out prior permission from Elaborate Communications.

Ship Management International is published six timesa year and is entirely devoted to reporting on thedynamic and diverse in-house and third party shipmanagement industry. Subscriptions UK and ROW – 1 year: £85 ($153); 2 years: £160 ($288).

Download a subscription form fromwww.shipmanagementinternational.com or

Send subscription enquiries and/or address corrections to:

Elaborate Communications, Acorn Farm BusinessCentre, Cublington Road, Wing, Leighton Buzzard,Bedfordshire LU7 0LB, United Kingdom. Tel: +44 (0)1296 682051/682241/682403

Editorial Director: Sean MoloneyAssistant Editor: Andy PierceTechnical Editor: David TinsleyAdvertisement Director: Jean WinfieldSales Support: Martine FrostAdvertising Sales: Karen CrayResearch Manager: Roger MorleyAccounts: Irene MorleyDesign & Layout: Phil MacaulayPhotography: Martin Bou MansourKnife courtesy of Donaldson's Gunsmiths, Milton Keynes

Additional Photography: Cyprus Department of MerchantShipping

Editorial contributors: The best and most informed writers currently servingthe global shipmanagement and shipowning industry.

Ship Management International Editorial Board

Rajaish Bajpaee (Bernhard Schulte Shipmanagement)

Guy Morel (InterManager)

Nigel Cleave (Epic Ship Management)

Andreas Droussiotis (Bernhard Schulte Shipmanagement)

Dirk Fry (Columbia Shipmanagement)

Sean Moloney (Elaborate Communications)

Svein Pedersen (EMS Ship Management)

Published by

Elaborate CommunicationsAcorn Farm Business CentreCublington Road, Wing, Leighton Buzzard, Bedfordshire LU7 0LBUnited Kingdom

Sales/Accounts +44 (0) 1296 682241/682051Editorial +44 (0) 1296 682356 Fax: +44 (0) 1296 682156Email: [email protected]/[email protected]

Approved and Supported by

July/August 2007 Issue No. 8

www.shipmanagementinternational.com

Could thelast one out,please turn off the lights

Welcome to Ship Management International

8 SHIP MANAGEMENT INTERNATIONAL ISSUE 8 JULY/AUGUST 2007

NOTEBOOKSHIPMANAGEMENT NEWS AND REPORTS FROM AROUND THE WORLD

Profit-taking was believed to be the motivator behindthe deal to sell 27% of Hong-Kong-based Anglo-Eastern Ship Management (AESM) to Belgium'sCMB and the existing shareholders have not ruledselling even more of their stock should the right dealcome around.

CMB was quick to announce that its 100% sub-sidiary Bocimar Hong Kong had concluded the agree-ment to acquire a 27% stake in AESM. However,Anglo-Eastern Chief Executive Officer Peter Cremerstold SMI that he still had to fly out to Belgium to con-clude terms of the deal.

Under Belgian stock market rules, if a publicly-quot-ed company like CMB "makes a commitment, even onthe back of an envelope, it has to be announced. Butnothing is signed, yet," he said.

The tie up between AESM and CMB is logical con-sidering the fact that Anglo-Eastern manages all ofCMB's tonnage. But as Peter Cremers said: "We want-ed to park some of our shares in the company some-where and we thought this was the best hope for us."

Cremers would not deny that the AESM sharehold-ers would sell more of the stock given the right oppor-tunity. He told SMI: "I can't say absolutely no. Theremay be deals around and it would be foolish of me tosay no way. But there is no action plan on this. We havetwo established companies which are shareholders,Denholm and CMB. They have been long-term in thisbusiness and they are not looking for a quick sell. I stillhave a large shareholding myself."

In an announcement CMB said the acquisition wasstill subject to due diligence but that it expected tofinalise the acquisition during August. "Through thisacquisition, CMB will establish itself in this specialisedsector and secure its access to ship management andcrew management services," a company statement said.

Anglo-Eastern was purchased in 1998 through a suc-cessful management buy-out by Peter Cremers, MarcelLiedts and Richard Wong. The three owners remain atthe helm and are actively involved in the day-to-dayoperations of the business.

Shareholders profit on the back of AESM sale

NOTEBOOK

Philipe Burghelle-VernetHead of the European Commission’sMaritime Safety Unit

“We are trying to get rid of all substandard ships

from European waters. By establishing a traffic

monitoring system and through port state control

we have proposed to improve the European sys-

tem. The idea is for us to be able to control 100%

of ships visiting EU ports, not only 25% of ships

as we do now. Today, there are ships which are

never inspected in European ports simply

because the individual activity of member states

makes it possible to escape. As long as we estab-

lish a common objective covering 100% of the

vessels nobody could escape.

“We have suggested that ‘risky’ ships be

inspected every six months and ‘low risk’ ships

every three years. We aim to establish a ranking

system, involving several criteria, between ships

which call at European ports. High risk ships

would be inspected very often and good ships

inspected less often.

“We also want to reinforce the banning sys-

tem. Today, bans can be lifted after 24 hours –

that is simply not normal. The situation should be

improved including establishing a complete ban

in order to ensure the worst offenders will never

be permitted to enter into European waters.

Clearly the policy is conceived as zero-tolerance

to substandard ships.”

OVERHEARD

Hong Kong-based Fleet Management hasmoved to quash market speculation that itis about to be sold, claiming it still has thetotal support of its owner the Noble Group.

Fleet Managing Director, KishoreRajvanshy, said he was angered by markettalk that the company was up for sale andwas keen to put the record straight.

He said: “I can tell you, categorically,that there is no such intention whatsoeverto sell. Any talk of the impending sale ofany part of Fleet Management is complete-ly unfounded.”

Fleet, an independent company ownedby the Noble Group, operates around 180vessels from bases in Hong Kong andLondon. Only last month it opened a newoffice in Cyprus. It also has plans to estab-lish a new centre at Houston, US.

Talk of Fleet’s impending sale has beenrife in shipmanagement circles in recentmonths. However, Mr Rajvanshy

explained that he has no idea where therumours originated or what the underlyingmotivations could be.

Fleet Management continues to havethe full support of the Noble Group andwill continue to operate as an independentbody, free to make its own business deci-sions, Mr Rajvanshy said.

Fleet chief slams sale rumour

"The regulators are well aware of what theindustry is doing and if they see that theshipping industry is taking action, they willback off a little bit. What they don’t like isan industry which just sits back and doesnothing. You have to put it into perspectivethat shipping is by far the most environmen-tally-friendly way of transporting cargo.Even the EU is trying to get cargo off theroads and onto ships throughout Europe. Ifshipping can show it is improving then thereis no alternative to ships transporting goods.

We will still get unilateral action andthat is not necessarily a bad thing. I don'tlike it but proactive governments andlocal governments like California are put-ting it on the agenda and they are makingthe rest of the world react. There is a bal-ance there in that those that are trying todo things locally are also driving theagenda. In principle I believe in interna-tional regulations but in some cases youneed a certain amount of push and theycontribute to that push."

OnTheRecord with Tor Svensen, Chairman of the International Association of Classification Societies (IACS)

How convinced are you that taking action as an industry against shipboard

emissions will hold off action by the unilateral regulator?

11JULY/AUGUST 2007 ISSUE 8 SHIP MANAGEMENT INTERNATIONAL

NOTEBOOK

Schulte claims business as usualGerman ship owner and manager Bernhard Schultehas denied suggestions that its decision to merge itsfour shipmanagement units into one operation con-trolling in excess of 500 vessels is linked to anyfuture plans to sell the business.

In a statement, the company said it regarded ship-management as a core business together withshipowning, and would not divest, whether by IPO orsale or any other means. "The last thing on our mindwould be to sell what we consider core to everythingwe do," it said.

It went on to stress that the Schulte familyremained fully committed to the business "and repre-sentatives of the next generation will join the man-agement of the company, in due course".

Schulte took the shipmanagement sector by sur-prise when it announced it would merge itsautonomous units – Eurasia, Hanseatic, DorchesterAtlantic Marine and VBSK into one companyBernhard Schulte Shipmanagement.

It said it had merged the units in response to devel-opments in the shipping industry, "which requiresubstantial investments in personnel, training, infor-mation technology and quality assurance resources".

Overall responsibility of the new company will bein the hands of the Executive Board which is drawnfrom the previous heads of the autonomous units.

The world's largest chemical and productstanker simulator has been installed in theprivately-run Maritime Academy of Asia &the Pacific in the Philippines.

It was installed with the help of the AllJapan Seamen's Union-associated MarineOfficers' & Seamen's Union of thePhilippines Training Levy Fund and wasinstitutionalised under the framework ofthe Foreign Seafarer Labour Treaty.

Simulators for VLCCs, LNG carriers anddiesel engines have already been installed ata number of seafarer training centres in thecountry and the latest addition is the fourthseafarer training facility operated by theInternational Mariners Management

Association of Japan and the Philippine-Japan Manning Consultative Council.

The installed system is made up of the tank simulator, hybrid computer simu-lator, control room, classrooms and related equipment. Loading, unloading,cargo transfer, tank cleaning and all otheractual operations undertaken aboardchemical tankers can be reproduced bythe entire system.

A suitable training programme will be launched in November after a more concrete education curriculum for theintensive training of Filipino seafarers fordeployment to chemical carriers has beenformulated.

World’s ‘largest’ simulator is installed

NOTEBOOK

Interorient Navigation has revealed it nolonger wishes to be considered a third partyship manager following its steady evolutioninto a shipowning entity.

The Cyprus-based company has seen anexplosion in its shipowning activity in recentyears and has a proud orderbook to match.

Captain Peter Bond, Interorient GeneralManager, said: “The message we want to getout is that we are a ship owner and not a shipmanager. We now have a very large fleet ofour own with a large newbuilding programme.

“Its not that we don’t want to bring any

more ships into management, because westill have the resources for that, but the com-pany can certainly make an awful lot moremoney out of owning a ship than we canmanaging a ship,” Captain Bond added.

Interorient started as a crew manager inCyprus in 1979 and now has an owned fleetof approximately 60 vessels, with a further70 under crew management.

“We still have third party customers andwe will remain loyal to our existing clients.But we are not seeking any [new] third partybusiness,” Captain Bond said.

Interorient ‘now an owner’Of

fThe

Cuff

“We do everything in house because itallows us to have better management of ourfleet. Also, using an integrated model helpsus to develop technical skills in-house thatyou can keep and use to develop additionalservices. The biggest challenge for theindustry is to find enough qualified seafar-ers, particularly officers. This is why webelieve having an integrated shipmanage-

ment model is good, because we can trainour own people. This way at I know I havethem. People have contracts and can obvi-ously go to other companies. But our systemallows us to make plans in a different way.You can have a contract with a ship manag-er, but one day you might ask him for crewfor a vessel and he won’t have any. That willcost you a lot of money.”

Sveinung Støhle. President & CEO, Höegh LNGWhat do you think about third party managers?


NOTEBOOK

StealthGas is set to raise in excess of $120million from the stock market to help financeits recent influx of new vessels.

The Nasdaq-listed company is in the midst ofa major fleet expansion project, with at least ninenew additions expected to take the fleet to 38before the end of the year. The latest windfall hasbeen earmarked to pay the outstanding balanceon five recently-purchased LPG carriers.

StealthGas gained the funds after it upped

the scale of its planned secondary share offer-ing by 20%. The company was expected toissue 6 million shares, but surprisingly raisedit to 7.2 million.

The stock issue price of $18 per share isexpected to please StealthGas owner, HarryVafias. When the company was listed in late2005, shares were worth £14.50, althoughthey topped $20 this year at the height of asummer hot spell.

Bleeding rumours!How we love a bit of gossip. But the word onthe grapevine is that one major shipmanager ishaving his own problems securing crews fromthe Philippine market.

According to a smiling competitor, the com-pany in question was described as "haemor-rhaging crew at the moment down in thePhilippines" and desperate to fill much neededcrew slots.

I guess it’s a case of what goes round, comesround.

Harry steps on the gas

Cutting theheart out ofthe tankermarket

Oil traders are the dominant players in today's tanker markets. But with somuch tonnage under the control ofthese cargo interests, are the marketsin danger of being held to ransom?Sean Moloney reports.

DISPATCHESDISPATCHESS P E C I A L R E P O R T

In early June a little known Singapore-based tanker operator tookthe tanker sector completely by surprise when it swooped on thefledgling Middle Eastern products carrier newbuilding marketand ordered four 50,000dwt medium range vessels in a deal val-

ued at $175m.The contract, which included four options, was by far the biggest ever

signed by Dubai Drydocks. But with delivery scheduled between early2009 and 2010, Navig8 Chief Finance Officer and New BusinessDirector, Modi Mano, said his company's order was placed at the Dubairepair facility because the yard could promise much earlier delivery dates.

So what was so special about this order? Well, Navig8 is an exampleof the growing band of highly active shipowning, time-charter trading,derivatives trading, risk management and commercial as well as techni-cal management entities now dominating the tanker markets. It was setup only three months earlier and owns four MR tankers under construc-tion in South Korea that it acquired as newbuilding resales. But, moreinterestingly, it is reported to control a further 60 or so product tankersin the water and newbuildings through time-charters, bareboat chartersand management contracts.

Another example of this new phenomenon that is currently grippingthe tanker markets is oil trader Glencore. Recently, it announced that itwas lifting its newbuilding orderbook in South Korea by booking aseries of MR product tankers at SPP Shipbuilding, through its tankershipping subsidiary ST Shipping (STS), for delivery in 2010. Accordingto press reports, STS is understood to have contracted four 50,000dwtMR tankers plus two options at SPP late last year for more than $48meach. The company recently exercised the options, which are also duefor delivery in 2010. Including the six ships booked at SPP, STS nowhas 14 MR tankers on order at yards in South Korea.

STS turned to shipowning only last December, when it ordered four51,000dwt tankers plus two options at around $49m each from SLSShipbuilding for delivery in 2008 and 2009. In February, it bought four51,000dwt newbuilding resales contracted by Gulf Energy Maritime atHyundai Mipo Dockyard. Two of the vessels will be delivered in 2009,followed by a second pair in 2010.

Glencore shipping chief Jan Andersen reportedly told the press thatit was a natural progression for the company to move from short-termto long-term charters and on into shipowning. He said that in the past,the company has tended to control its shipping through various jointventures but looking ahead intended to work a little more for itself as itcontinued to grow. Industry estimates suggest that at the very minimum,STS currently operates a fleet of 14 handy size tankers, 74 MRs, 31LR1s, 21 Aframaxes, and six Suezmaxes.

So how influential are these new tanker market players?Well, further analysis of charter market statistics shows that the role

currently being played by the oil traders in the tanker markets is signif-icant. At the very minimum, 45% of the global MR fleet is currently inthe hands of these 'traders', while a whopping 42% of the VLCC mar-ket is also under their control and the figures could be higher. So whatis the problem?

"If so much tonnage is currently being controlled by companieswhich trade ships but who also have cargoes then how do we knowwhat the real market is?," one broker told SMI.

"The downside is that these traders are very efficient by nature. Theycan schedule ships in and out like no one's business. They can reducetheir ballast times like you won't believe. They have the cargoes andcargo is king."

He added: "The tanker business survives on inefficiencies because asa ship owner you want your ships to be as efficient cost-wise as they canbe, but you want your competition to be inefficient and you want themarket overall to be inefficient. If there are more traders with cargoeswanting more ships then how can you tell how the market will be affect-ed if these ships are effectively taken out of circulation."

What is clear is that this situation is a new dynamic and, as a result,few market watchers are able to predict the oil traders' next move, espe-cially if the market starts to go down in a serious way. By having a rel-atively small number of interests control a large amount of tonnage thiscan restrict the tonnage available for say period cover. This will meanmuch higher rates and, due to price resistance in the market, could exac-erbate the potential problem of even more ordering of new tonnage tomeet any new demand. And so the boom and bust scenario goes on.

As one broker SMI spoke to stressed: "These guys controlling theships have a vested interest in keeping rates up because they are mak-

ing money out of the cargo. That is the case that tends to disguise abad market because there is an element of price resistance that isn'tnormally inherent.

"Both sides of the equation want the rates to stay up. That means thatif there is a real downturn it could hit quite hard and to be honest, it hashappened before (post-1973), where we had massive bankruptcies inthe oil business."

The biggest problem facing the tanker market at the moment is thehigh level of newbuilding activity. Sceptics say that with a 50%increase likely in the 700 or so strong tanker fleet over the next threeyears, there is nowhere near enough anticipated growth in oil demandto fill these new and existing bottoms.

One major US tanker broker put the situation into perspective."The Glencores and Vitols of this world have massive commitments to

time charters at high rates and this is a whole new approach. They havemade more money in shipping than they have in trading. The question isif the market goes down will they exit? Will they cut and run? It's diffi-cult to say, we can only wait and find out," he said.➩

JULY/AUGUST 2007 ISSUE 8 SHIP MANAGEMENT INTERNATIONAL 17

DISPATCHESSPECIAL REPORT

“These traders are very efficient by nature.They can schedule ships in and out like noone's business. They can reduce their ballasttimes like you won't believe. They have thecargoes and cargo is king”

But what would happen if the market did decline? Well, according toone New York broker, the market would have to stay down for a longtime because there is so much money around that people can supportthe losses for considerable amount of time. Hence, this is why tankerowners are reluctant to fix their ships long-term because they say theywant to be there for the upside when it comes.

"This year will be fine, next year probably will be OK, but with 70VLCCs coming onto the market in 2009, it depends how many singlehulls actually go for conversion to bulk carriers, FSO/FPSOs or forscrap. If you have a 1990-built single hull VLCC and you sell it todayfor $40m, then what do you do. It's great if you go and retire on thebeach but if you want to reinvest that money – a new VLCC? Forget it,it's too much money," he said.

The accelerated activity of the oil traders in the tanker markets alsohas the potential to affect the single hull/double hull balance. Becauseif the traders take double hulls out of the market, then could it be rea-sonable to assume that all that would be left would be an oversupply oflargely unwanted single hulled vessels?

"No one takes a single hull on long-term charter unless it was done

some time ago," stressed one broker we spoke to. "The consensus is thateveryone should go for double hulls. That is convenient even for thebroking market, because if demand for single hulls is not there, thenthey will be scrapped and everyone wants ships to disappear from thetrading fleet because it helps with the surplus," he told SMI.

But what is the composition and style of the charters currently beingundertaken by the traders?

"We don't know because they are all private. But what the tradershave done in recent years is forge links with certain owners, throughprofit shares etc. They want control of that owner's tonnage and theycan get high returns for the ships. They throw their books open and share their results with the owners and the owners have done verywell out of it. But it doesn't help the market overall," one broker said

DISPATCHES SPECIAL REPORT

“The avalanche will come. And I hate to be alldoom and despondency. The absolute crunchfor tankers must be 2009 because of recorddeliveries. There must be a point between nowand 2009 when people realise that things arenot as good as they thought they were”

"If we had a sustained downturn in the market and there are plenty ofships available for charter then charterers would come in and say wewill take the charter which is what normally happens. But they can't dothat because there aren’t any ships. So what do they say – well we willorder our own, because we need to control the situation, which makesthe surplus even bigger. This whole situation is forcing more new con-struction," he stressed.

However, some market observers believe the future is very clear."The avalanche will come. And I hate to be all doom and desponden-

cy. The absolute crunch for tankers must be 2009 because of recorddeliveries. There must be a point between now and 2009 when peoplerealise that things are not as good as they thought they were. Even if wehave a Katrina 2 and refineries are knocked out and product demandgoes back up, these are short-term factors, only noise. Once the noisegoes away what is the real market?” one broker said.

"At some point more efficiencies will be realised and in the face ofmore ships, rates will come tumbling down. The interesting point iswho will be the casualties. Are they the traders – of course not. If theyhave vessels on period charter they can easily dump them. They canrenege; they can just not renew.

"They can cut their losses at a weak point in the market. You can saythe owners can stomach it because they have so much money but if allof their ships, each one of them, loses money, then how long would theyhave enough money around to support them?” he said.

So what can the tanker owners do to protect themselves. Well accord-ing to one broker, tanker owners can ensure their ships are committedon long-term charters or contracts of affreightment with reputablenames. That way they spread their risk. The only other way owners cansurvive and level the playing field is by taking a share in the cargoes.

"If they start to get into cargoes in the same way the traders have gotinto shipping then they have a chance. Anything is possible. They canbuy the expertise – buy an oil trader. But you know it’s a downhill storywhen OMI sells. And people only do this because they have no moneyor they want out," he speculated. ■


The impact vetting has on out-charter business is not alwaysrecognised in the strategic operational and commercial man-agement of tankers. Some fleet managers take the view thatthe vetting process is outside their control and when a tanker

is rejected, often throw their hands up and 'blame' the unfathomable'whims' of the vetting organisation concerned.

This is a mistake stemming from a lack of understanding of theobjectives of the vetting function; the processes being used and theactions that can be taken to positively influence a vetting review.

While it may be understandable that fleet operators dislike or feelthreatened by vetting 'assessments' (or in their view 'criticisms'), theycan, with management understanding and action, use the vetting data toimprove their business.

The days when tanker 'vetting' consisted of an ex-seafarer reviewinga ship inspection report and making a vetting decision are fast disap-pearing. Charterers’ vetting departments use a wide range of data and,in some cases, use sophisticated computerised data analysis systems toevaluate potential third party risk to their business. While a fleet man-

ager has an opportunity to improve the interface with the charterer’svetting department, this raises a number of questions such as: havetanker fleet managers kept pace with the vetting changes; are they man-aging the process to achieve a good vetting outcome or are they payinginsufficient attention and suffering the business consequences?

The answer is that not all fleet managers have kept pace with vettingrequirements so consequently some are failing to adequately managetheir part in the vetting process. The outcome may be an adverse impacton their out-charter business because their tanker may not be acceptedby the charterer or terminal operator.

The primary objective of the charterer’s vetting function is to accu-rately assess, through their vetting process, the quality of the operatorand the vessel being offered or, put another way, the risk to their ownbusiness of using a third party ship.

Historically, individual ships were vetted and were either accepted orrejected. It is increasingly the case that where a fleet operation fallsshort of a predetermined standard, the entire tanker fleet will not be eli-gible for longer-term charter business. In the case of shipmanagementcompanies, there is the possibility that the assessment of the managedfleet can be adversely impacted if the ships of one owner perform to alower standard than the rest of the fleet. This is because some vetting

assessments will start by looking at the total fleet management and maynot, in general, be broken down by individual owners, under the ration-ale that the ship manager's safety management system should be consis-tently applied on all of the ships, regardless of who the principal is.

To understand how fleet managers can use vetting to their advantage,they must first understand the importance of vetting to the chartererand, secondly, perceive vetting as a potential business improvementopportunity and not simply as a hurdle to be jumped.

Oil Majors carry out vetting primarily to protect their people andassets; exercise and demonstrate due diligence in their business deal-ings; and to provide necessary paper trails in the event of an accident orserious casualty. By directing their business to quality operators, theycan also minimise their transportation risk.

Investment by the charterers in terms of manpower, expertise, com-puter systems and management of the vetting process is considerable.Apart from utilising OCIMF's Tanker Management and SelfAssessment (TMSA) system as well as port state control detentionrecords and ship inspection reports, they increasingly use sophisticated

scientific data analysis systems to handle the myriad of data gathered. These systems do not dispense with the need to use marine expertise

but can achieve rapid and consistent analysis by breaking down the vet-ting process into discreet components, including the quality of the oper-ator; quality of the ship; and the nature of the voyage. Analysis of thesecomponents provides an overall voyage risk assessment that leads to avetting decision. A major driver is to enable consistent analysis of everyevaluation (oil majors may carry 80,000 plus such evaluations a year),to record every detail and enable its retrieval in the event of an incident.

The vetting activity put in place by the tanker fleet operators shouldrespond to, and dovetail with, the vetting activity of the charterers. Butdoes it? It would be unreasonable to expect fleet operators and man-agers, especially the smaller companies, to employ the numbers of peo-ple or have the sophisticated systems used in oil major vetting depart-ments. However, the actions taken should be commensurate with theirbusiness needs.


DISPATCHES SPECIAL REPORT

By Tim Knowles– hurdle or opportunity?

The primary objective of the charterer’s vetting function is to accurately assess,through their vetting process, the quality of the operator and the vessel being offered or,put another way, the risk to their own businessof using a third party ship

In my experience, fleet managers sometimes fail to recognise thegrowing importance to their business of effectively managing the vet-ting interface. Many operators do not put in place the investment (interms of manpower, training, equipment and computer data analyses ofvetting key performance indictors) to meet their business needs. As aconsequence misunderstanding and confusion arises.

For example, many tanker operators employ a technically competent'vetting superintendent' to manage the vetting interface with the charter-ers’ vetting departments. This may be a standalone role or part of therole of the DPA or Safety Officer. The task typically includes arrangingtanker inspections (often the major part of their work), meetings withoil major vetting departments, taking the lead in vetting audits and pro-viding post-incident information to the charterer. Their reporting lineand interdepartmental communications should ideally ensure goodworking relationships with the fleet operations group and also the char-tering department.

These usually hard working and technically-competent peopleoften suffer from a lack of management support, lack of understand-ing of the vetting process and see the task as mainly responding to oilmajor post ship inspection deficiency questions. They are ill-preparedor trained to manage their interface role with the vetting organisa-tions, especially when it comes to representing their company at dif-ficult meetings with charterers vetting managers. It is not unusual forthem to approach the charterers vetting people as 'fellow mariners'rather than customer’s representatives and as a result are not ade-quately prepared for the management systems related questions thatare often raised.

Tanker fleet managers should therefore ensure that the managementstructure needed to interface with the charters' vetting organisations isconsistent with the business objectives of the company and that the vet-

ting process is reviewed and understood by fleet management. The vet-ting interface role should also have a clear and comprehensive jobdescription that takes account of all the activities involved in theprocess including the 'customer interface' activity. And the personresponsible for the vetting interface should focus on activities for whichthey are qualified and not be over burdened with administration worksuch as arranging inspections.

It is essential that those involved in vetting are trained accordingly.This should involve process and system training as well as training formeetings and interpersonal skills. The vetting interface function shouldbe supported with data, system access and equipment so evaluation ofthe fleet performance is at least equal to that carried out by the charter-ers' vetting department. Meetings with charterers' vetting people shouldonly be carried out when necessary, with properly prepared personnelarmed with the data pertinent to the meeting objectives and data thataccurately represents the performance of the fleet. Data should not con-sist of information that the charterer has from other sources such as thefleet list, unless requested.

Also, international databases that contain information on the fleetand feed into the charterers’ computerised systems should contain accu-rate data and it is important that post incident interface communicationsand data are heavily managed. And last but not least, the charterer's vet-ting department should be treated as a customer and be supplied withthe service and data they demand. ■

Tim Knowles was Manager of third Party Tanker Q/A in the Marine Services

division of International Marine Transportation and was responsible for

managing the global processes of third Party Tanker Screening for those tankers

considered for ExxonMobil affiliate use. He now advises tanker owners,

managers and operators on vetting issues. [email protected]


SABYASACHI HAJARAChairman and Managing Director, Shipping Corporation of India

“You see, specialisation and technical expertise are important, but

only up to a certain level. Beyond that, you are basically an adminis-

trator. There will be lots of people with technical expertise to help you

make the final decision, but you actually turn into a general manage-

ment person when you hit the most senior levels”

One of Sabyasachi Hajara’s most abiding regrets is that the pressureof being Chairman and Managing Director of India's national carrierShipping Corporation of India (SCI) has left him with insufficienttime to indulge his favourite hobby – classical singing.

Indeed, he is never happier than when he is running his fingersacross the keyboard of his beloved harmonium and giving vocal ventto the tunes that reside in him. Most of the time, it is the walls of hishome in Mumbai’s exclusive Malabar Hill area that resonate to hiswarbling but there was a time when audiences of over a thousandswayed to his beat.

“I am a great lover of Rabindra Sangeet, the songs of RabindranathTagore and have even performed solo in the one of the largest audito-riums in Calcutta, Rabindra Sadan, some three decades ago,” he said.

“This love of singing is a hobby I have enjoyed throughout my lifebut I have neglected it for the past three or four years.”

Up until 2003, when Mr Hajara became increasingly involved withhis duties as Director of Human Resources on the SCI board, hewould make it a point every Sunday to go to the home of the poet andTagore expert, Nalini Madgaonkar, who has translated the greatIndian poet from the Bengali into several Indian languages. Tagore


SHIPMANAGEMENT HOW I WORK

workHow I

SMI talks to an industry achiever, and asks the question: How do you keep upwith the rigours of the shipping industry?

“I took up golf in 2003 and have becomeaddicted. Whenever I am in town, I travel atdawn to the Willingdon or the US Club to getin a round. If I can manage, I like to play fivedays a week, but I travel so much with my job that I can rarely get that many golfingdays in”

first wrote his poems at the age of eight and published his first sub-stantial poetry – under the pseudonym Bhanushingho ("Sun Lion") –and wrote his first short stories and dramas in 1877, at the age of 16.

“Nalini has a small singing group made up mostly of amateurs, butwho have, on occasion, performed in large auditoriums. I had been apart of this group for many years, but have stopped over the past fouryears because I have been too busy with SCI work.

“Nevertheless, once in a while, when there is a little time, I sit athome with my harmonium, and exercise my vocal chords. Believe itor not, I used to play the guitar a long time ago, even for a few yearsafter I left college, but have since lost the skill.”

There are a few people in the Indian shipping industry, notably SKSShipping chief R.V. Shahi, who organise musical programmes, andcertain 'corporates' like the Indian Oil Corporation hold a `SangeetSabha’ (music meet) every few weeks. Mr Hajara and his wife's inter-est in music and singing are well known and they have been invited tomany of the functions.

The other major stress-buster in what can be a very demanding jobis the game of golf. The SCI chief is a keen amateur golfer and playsto a modest 23-handicap. “I took to the game in 2003 and havebecome addicted. Whenever I am in town, I travel at dawn to theWillingdon or the US Club to get in a round. If I can manage, I like toplay five days a week, but I travel so much with my job that I canrarely get that many golfing days in.”

Golf is only the most recent indulgence of a man who has alwayshad sport in his blood. In his college days in Calcutta (now Kolkata),he played cricket, football and table tennis. Then, in his early collegedays, he took up tennis, and became reasonably adept at it.

“I was a fairly good club standard player,” he reminisced. “I repre-sented the Saturday Club, Calcutta, in inter-club tournaments; andwas friendly with some of India's Davis Cup players. I occasionallyplayed tennis with them, of course, not at their level, but at the sametime, was rarely disgraced on the court.”

This love of, and indulgence in, sporting activity is what has keptthe 55 year-old Mr Hajara’s blood pressure at a steady 120/80 leveland kept him free of the hypertension and other such diseases thathave been the bane of executives at his level in the industry. That, andhis innate coolness.

“I almost never throw tantrums. Either on the golf course or whileexercising my voice in the bathroom, I let the tension flow out of me.I am also proud of my man management skills and my ability to moti-vate and bring the best out of my colleagues. That cannot be done byscreaming at them.”

Strangely, although Mr Hajara was Director of Human Resources(HR) when he was picked by the Public Enterprise Selection Board(PESB) in mid-2005 to take over the SCI reins from the long-servingPrabhat Kumar Srivastava, his background was as far removed fromadministration or human resources as you could get.

He graduated in chemistry from the Calcutta University with agood first-class degree and a silver medal helped him get into one ofthe premier business schools in the country, the Indian Institute ofManagement (IIM) in Calcutta, from which he completed his Master’sdegree in Business Administration, majoring in marketing and opera-tions research.

“It must be mentioned that in the first year of the course, every stu-dent was given knowledge of all the different aspects of management,including finance, administration and HR, so it was not as if I was atotal greenhorn at HR,” he said.

When the Shipping Corporation of India came calling at the IIM inApril 1973, Mr Hajara became a campus recruitee. “SCI is the only com-pany I have ever worked for,” he recounted with pride. “I am one of theunique MBAs who has not job-hopped. I have been here for 34 years.”

Throughout his first quarter century in SCI, Mr Hajara was a com-mercial shipping man. He was originally involved in liner shipping, ata time when containerisation had not been fully launched in India andit was all conventional breakbulk liner shipping. ➩


SHIPMANAGEMENTHOW I WORK

“I am a great lover ofRabindra Sangeet, thesongs of RabindranathTagore and have even performed solo in the oneof the largest auditoriumsin Calcutta, RabindraSadan, some threedecades ago. This love ofsinging is a hobby I haveenjoyed throughout my life but I have neglected it for the past three or four years”

“I shifted to containerisation when it came into India in a big wayin the late-1970s. In SCI, we had a great tradition of rotating employ-ees in as many departments as possible. So subsequently, I moved todry bulk, chartering, specialised tankers like liquefied natural gas(LNG) tankers, liquefied petroleum gas (LPG) tankers, phosphoricacid carriers and ammonia carriers.”

When a board-level vacancy for Director of Human Resourcescame up in 2001, Mr Hajara went to his predecessor, Mr Srivastava,and asked him point-blank whether he should appear for the interviewfor that post, since he had never majored in HR or personnel management.

"His answer, in hindsight, was an excellent one,” said Mr Hajara. “Hesaid that there was no HR professional, as such, in SCI. The corporationhad always relied almost exclusively on seafarers – like master mariners,chief engineers, who had looked after the seafaring personnel.

“As far as shore personnel were concerned, it was generally staffwho had come up from different functions that had taken care of theHR function. So, he told me, I was as well- or as ill-equipped as anyof the other contenders for the post. A board-level vacancy is a board-level vacancy, PK said. If you are appointed to the board today, youwould be senior to any person who comes on the board after you. Ina government organisation, seniority does count. Since you have agein your favour, go for the interview and give your best; and don’tbother what happens.”

It was advice of the highest order, and Mr Hajara gratefullyacknowledges the role of the previous chairman in shaping his career.

“I thoroughly enjoyed my time as HR Director. It was a new areaof shipping and I got so deeply involved in HR that I represented, not only the Indian National Shipowners’Association (INSA) but also

the International Shipping Federation in the high-poweredInternational Labour Organisation (ILO) committee. I even chaired anILO committee.

“Looking back, I must have been generally liked and admiredsince, despite the fact that I had been in HR for barely four years, Iwas asked to chair an ISF International Manning and TrainingConference in London where the secretary-general of the ITF was thekeynote speaker.”

The ILO was the first body where Mr Hajara got superb exposureto international shipping, and became known to the global shippingfraternity. And his four-year stint as an administrator and juggler ofhuman resources at SCI helped his later career enormously.

“You see, specialisation and technical expertise are important, butonly up to a certain level. Beyond that, you are basically an adminis-trator. There will be lots of people with technical expertise to help youmake the final decisions, but you actually turn into a general manage-ment person when you hit the most senior levels.

“For me, the job of a senior person is man-management. At thecentre of your success as a senior manager is your ability to motivateyour team. And how do I motivate my team? I like to put in my ownbest and sincere efforts.

“Having been an SCI man for 34 years and involved in Indian ship-ping, and then in world shipping I have developed a tremendous pas-sion for my organisation and for shipping in general. I try to pass onthat passion to my colleagues,” he said.

Mr Hajara draws attention to a study done by Bharat PetroleumCorporation and the Public Enterprise Selection Board together, inconjunction with the Hay Group, where a theory was propounded thatthe success of a CEO depended on his competency.

“Of course, `competency’ is a word regularly used in shipping, witha different connotation,” Mr Hajara claimed, with a chuckle.“Actually, competency is nothing but a combination of knowledge,skill and attitude.

“The theory was that knowledge and skill are the tip of the iceberg,whereas the underlying and enduring part of competency consists of


SHIPMANAGEMENT HOW I WORK

“Having been an SCI man for 34 years andinvolved in Indian shipping and then in worldshipping, I have developed a tremendous passion for my organisation and for shippingin general. I try to pass on that passion to my colleagues”

the personal attributes of a person, vis-à-vis his self-confidence,empathy with his colleagues and his attitude.

“When you come across giant multinational organisations like GE,it is standard operating procedure for the CEO to take a few days outevery few months and invite six to eight senior key personnel for ameeting at a secluded place to discuss, threadbare, the company’spresent status. Everyone comes out with his own ideas and the CEOalso gives his own input and acts as a mentor to the others. Mentoringis, in fact, an important function of a CEO.”

And what is Mr Hajara’s management style? Is he a hands-on manor is he a delegator?

The SCI chief feels the answer lies somewhere in the middle. Helikes to delegate responsibility but tells his colleagues that he must bekept informed at all times about what is going on.

“I have to be kept in the loop,” he says. “For example, if a ship isstuck or stranded somewhere for whatsoever reason, perhaps becauseof a shortage of personnel, I would like to know immediately.

“I hate surprises, so I should be told about anything unpleasant thathas happened. It is not nice to get a call from the Shipping Ministryor from a reporter that something untoward has happened to an SCIvessel. It has happened on a few occasions and it has upset metremendously. I like to delegate but the person has to accept responsi-bility with the authority given to him.”

The SCI chief has put his money where his mouth is and compre-hensively revised the Delegation of Power order in SCI. This hadremained in a status quo position for many years. Since the time thatMr Hajara took over the helm, the order has been revised and updat-ed. Financial limits for decision-making at different levels have beenrevised upwards many-fold.

Despite his dislike for losing his temper, Mr Hajara classes himselfas a basically impatient person. He says he likes to see things gettingdone within the timeframe he allocates and gets impatient if that doesnot happen. Then he starts pushing.

"Sometimes people have told me that I am a hard taskmaster. Butthen, I don’t spare myself, either. So there are no double standards. Yet,because of my nature, I find it almost impossible to be curt to people.On many occasions, I find myself spending a lot of time explainingthings even when I know that nothing is going to come of it.

“In particular, at a social level, my wife tells me that one of mydrawbacks is my inability to say no. On the official front, I suppose Ican; but not on the personal front.”

One of Mr Hajara’s most endearing traits as a CEO is his open-doorpolicy. Any of his colleagues, and not just the senior ones, can walkinto his office and talk to him. Of course, he does have structuredmeetings with his senior managers every week but they have the rightto walk into his sanctum whenever they have a problem.

“What drives me is my passion,” he said. “I feel that most of us inIndia who have had the privilege of receiving higher education havereceived a huge contribution from society at large; and that it becomesincumbent upon us to give something back. This is because educationin India is highly subsidised. It is the society and nation that con-tributes to your grooming. And I feel it is your moral obligation togive something back.”

But what frustrates him? “The road-blocks placed in my path whenI try to move forward.” he admits, frankly. “Whenever I find that myzeal or drive to get on with it gets stonewalled by procedural bottle-necks, I get frustrated.

“But then I try to work my way around the problem. I don’t like tothrow up my hands and say I have been beaten. And this is where myfamily feels that I do too much. They tell me that if I am convincedthat I have done my best, I should leave it to God instead of gettingemotionally upset. But fortunately or unfortunately, I am an emotion-al man, and get emotionally attached to whatever I do.”

And how does he deal with the rigours of working in a taxingindustry like shipping, where international travel often takes up 10-12days a month, and domestic travel another week?

“I am fortunate in that I don’t suffer from jet-lag at all. I can recallan incident when I had gone to Houston to discuss certain matterswith Enron, with whom we had a partnership for the Dabhol powerplant LNG transportation.

“But I received a call from my predecessor, Mr Srivastava, whowanted me to attend a crucial meeting in Mumbai. So I curtailed my stay in Houston and travelled for something like 22 hours, viaParis. I arrived at Mumbai at dawn, had a shower, attended the boardmeeting and went home at the end of the day. And I was alert thewhole time.

“I believe that I can live by the clock of the place where I am at aparticular time. Luckily, I can sleep like a baby on a flight. At thesame time, I have managed to stay awake even for a continuous 24-hour stretch without yawning and wanting to shut my eyes.” ■

Sabyasachi Hajara was in conversation with Shirish Nadkarni


SHIPMANAGEMENTHOW I WORK

“Sometimes people have told me that I am a hard taskmaster. But then, I don’t sparemyself, either. So there are no double stan-dards. Yet, because of my nature, I find italmost impossible to be curt to people”


TRADE ANALYSIS DUN & BRADSTREET

The Greek economy continues to show strongmomentum. During Q1 2007 real GDP expand-ed by 4.6% year on year (y/y), the highest ratefor nine quarters; the most recent figure meansthat the economy has grown above 3.8% y/y inall but two of the past 25 quarters. A combina-tion of factors has contributed to the strong eco-nomic growth seen in recent years. The hostingof the Olympic Games in Athens in 2004, anexpansionary fiscal stance and the increasinginflows of immigrants from neighbouringcountries have all boosted the economy.Meanwhile, as a consequence of joining theeuro-zone, relatively low interest rates (alongwith financial market reform) have resulted inan investment boom. More recently, reforms inthe tourist sector, banks' expansion in the fast-growing Balkan economies and increasingdemand in the shipping sector have also fuelledgrowth.

The strong expansion in recent times hasunderlined some imbalances that could affectGreece's medium- to long-term prospects. Thestrong fiscal stimulus that boosted the econom-ic expansion significantly undermined the fis-cal balance (in 2001-05 the shortfall was abovethe EU limit of 3% of GDP). The government,helped by the upward economic trend, man-

aged to bring its fiscal deficit to 2.6% in 2006and aims to reduce it to 2.4% in 2007, achiev-ing a balanced result by 2010. Prime MinisterCostas Karamanlis of New Democracy (ND)has confirmed that fiscal adjustment will con-tinue over the short term, but at a slower pace.An improved fiscal situation is highly desirableif the government is to gain some room formanoeuvre in case the economic climate sud-denly changes. However, continuing with thefiscal consolidation without considering itsconsequences could, paradoxically, threatenrecent advances. Given the opposition faced byND, a more moderate fiscal adjustment mayhelp Karamanlis to win the next parliamentaryelection and subsequently increase the pace offiscal reform. We consider that Karamanlis willcall an early election during the comingmonths.

Greece's extraordinarily large current accountdeficit underlines the process through whichthe country has lost competitiveness in recentyears. Competitiveness has been adverselyaffected by inflation, which has been persistent-ly above the euro-zone average for many years,and losses in competitiveness may ultimatelyundermine the country's growth performance.However, as the current account deficit maypersist for some time (given the favourableexternal environment), the adjustment in rela-tive prices (and wages) that is needed toincrease competitiveness is likely to bedeferred. Without high price flexibility in theeconomy, the adjustment may affect the levelof economic activity.

MINIMUM TERMS: SDThe minimum advisable form of documenta-tion or trading method under which D&Badvise customers to pursue any form of exporttrade with stated country.

RECOMMENDED TERMS: LC D&B’s recommended means of payment. Theuse of recommended terms, which are general-ly more stringent than minimum terms, isappropriate when a customer’s payment per-formance cannot be easily assessed or when anexporter may wish to limit the risk associatedwith a transaction made on minimum terms.

USUAL TERMS: 90-120 daysNormal period of credit associated with trans-actions with companies in the stated country.Several data suggest that the Norges Banktightening policy will continue in the shortterm: core inflation rose by 1.5% year on year(y/y) in March, credit expanded by 14.7% y/yin February and the unemployment ratedecreased to 2.1% in March. Moreover, themain trade union reached a 2007 wage deal forprivate sector employees that will result in awage rise of 4.5% this year.

LOCAL DELAYS: 1-2 monthsThe time taken beyond agreed terms for a cus-tomer to deposit money in their local bank aspayment for imports.

FX/BANK DELAYS: 1-2 monthsThe average time between the placement ofpayment by the importer in the local bankingsystem and the receipt of funds by theexporter. Such delays may be dependent onforeign exchange controls, foreign exchangeavailability and the efficiency of the localbanking system

IMPORT COVER: 0.1 monthsThe amount of foreign exchange a country hasin relation to the average monthly value ofimported goods and services. Only liquid for-eign exchange reserves from which a countrycan service its import requirements are includ-ed in this calculation.

According to figures released by the centralbank, the current account deficit widened toEUR9.0bn (13.9% of GDP) in Q1 2007, up byEUR924m compared with a year earlier. Directinvestment in Q1 showed a net outflow ofEUR2.0bn, but there was a net inflow ofEUR11.0bn in portfolio investments for Greekgovernment bonds and shares in local firms.

USUAL TERMS

TRANSFER SITUATION

C O U N T RY R I S K L I N E R E P O RT

GREECE

RISK FACTOR

TRADE ANALYSISDUN & BRADSTREET

DB2cThis ‘DB’ Rating Indicates: Low risk

Low degree of uncertainty associated with expected returns. However, country-wide factors mayresult in higher volatility of returns at a future date. Trend – Stable - The country's overall risk

outlook has not changed appreciably, even though some minor changes to its political, commercial, macroeconomic, and/or external risk environment may have occurred.

THE ‘DB’ RISK INDICATORThe ‘DB’ risk indicator provides a comparative, cross-border assessment of the risk of doingbusiness in a country. Essentially, the indicator seeks to encapsulate the risk that country-wide factors pose to the predictability of export payments and investment returns over a timehorizon of two years. The ‘DB’ risk indicator comprises a composite index of four over-archingcountry risk categories:

Political risk - internal and external security situation, policy competency and consis-tency, and other such factors that determine whether a country fosters an enabling busi-ness environment;

Commercial risk - the sanctity of contract, judicial competence, regulatory trans-parency, degree of systemic corruption, and other such factors that determine whether thebusiness environment facilitates the conduct of commercial transactions;

Macroeconomic risk - the inflation rate, government balance, money supply growthand all such macroeconomic factors that determine whether a country is able to deliver sus-tainable economic growth and a commensurate expansion in business opportunities;

External risk - the current account balance, capital flows, foreign exchange reserves, sizeof external debt and all such factors that determine whether a country can generate enoughforeign exchange to meet its trade and foreign investment liabilities.

The DB risk indicator is divided into seven bands, ranging from DB1 (lowest risk) throughDB7 (highest risk). Each band is subdivided into quartiles (a-d), with an a designation rep-resenting slightly less risk than a b designation and so on. Only the DB7 indicator is notdivided into quartiles.

ECONOMIC INDICATORS*2004 2005 2006 2007f 2008f

Real GDP growth% 4.7 3.7 4.3 3.9 3.5Inflationannual ave % 3.0 3.5 3.3 3.1 2.9Govt balance% GDP -7.9 -5.5 -2.6 -2.4 -2.2Unemployment% 10.5 9.8 8.9 8.7 8.2C/A balance% GDP -6.2 -7.7 -12.1 -10.8 -8.0

**The long-term interest rate chart tracks ten-year government bond yields.

CopyrightCopyright © 2007, Dun & Bradstreet. All rights Reserved. This report is provided for your internal business only and may not be reproduced or re-distributed in any manner whether mechanical or electronic without thepermission of D&B. Whilst D&B attempts to ensure that the information provided is accurate and complete, by reason of the immense quality of detailed matter dealt with in compiling the information and the fact that thedata are supplied from sources not controlled by D&B which cannot always be verified, as well as the possibility of negligence or mistake, D&B nor the publishers of Ship Management International do not guarantee the cor-rectness or the effective delivery of the information and will not be held responsible for any errors therein or omissions therefrom. The analysis shown on this page is taken from D&B’s monthly publication, InternationalRisk & Payment Review, which covers 132 countries around the world. To obtain the latest analysis,, please contact D&B’s Country Risk Services Group on 01494 422700 or visit www.dnbcountryrisk.com.

Long-Term Interest Rate*(% per annum)

Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 073.4 3.6 3.8 4.3 4.2 4.0 4.3

GlossaryKEYCLC Confirmed Letter of CreditCWP Claims Waiting PeriodFX Foreign ExchangeL/C Letter of CreditLT Long-termMT Medium-termOA Open AccountSD Sight DraftST Short-term

2.5

3

3.5

4

4.5

5Greece

Q3 05 Q4 05 Q1 06 Q2 06 Q3 06 Q4 06 Q1 07

Germany

GBPJPY*USD*(x 100)

1.47920.60570.7483

Exchange Rates(London, 18 June 07)

While the editors endeavour to ensure the accuracy of all information and data contained in this report,neither they nor Dun & Bradstreet Limited accept responsibility for any loss or damage (whether direct orindirect) whatsoever to the Customer or any third party resulting or arising therefrom.

Stamatis Molaris has never used third party managers in hisworking life and does not believe he should be regarded as anambassador for promoting the benefits of third party manage-ment to the Greek shipowning community. Not to put too fine

a point on it, he sees technical management as being an integral part ofhis company’s overall vessel operating strategy. And he is not alone inhis views.

This is not to say the Quintana Maritime President and CEO doesn’tappreciate the role third party managers play in today’s shipping indus-try. Because he does: he accepts they have a mission to fulfil as theindustry strives for greater openness and transparency. But when itcomes to infiltrating the traditional Greek family-owned shipping busi-nesses, third party managers should look elsewhere unless they areinterested in managing more sophisticated tonnage, he warned. Andonly then should they start to exploit the biggest weapon they have intheir armoury: their access to seafarers.

“Many Greeks like to operate the assets they own and it is very hardto change that mentality. A Greek ship owner believes he is the bestoperator in the world. That is the perception and we have to live withsuch perceptions,” he said.

According to Molaris, the Greek shipping company has little or nocorporate structure and family members traditionally fill important

positions. It was a very simple operation even down to the financing ofthe ships where “everything is based on the back pocket of the shipowner as well as through financing from traditional shipping banks.More than 90% of the ships bought many years ago were financed inthis manner,” he said.

The management style of these traditional companies was also veryintrovert with secrets being kept, not only from the outside authoritiesand classification societies but also between different departments with-in the company, he said.

“Greeks have always been very good and reliable shipping operators.They see themselves as the best at managing their ships because mostof the ship owners, themselves, have a Captain or a Chief Engineer’sbackground and so believe they know how to operate ships better thananyone else,” he said.

“I think it is the mentality,” agreed Niki Pappadakis, of AGPappadakis and Chairman of the dry cargo shipowners associationIntercargo.

“Do not forget that traditional Greek shipping companies are familybusinesses. Some of these families have been in the shipping industryfor three or four generations,” he said.

According to Professor John Tzoannos, Secretary General of theGreek Ministry of Mercantile Marine, Greek shipping has historically


REGIONAL FOCUS GREECE

Bagging the richesis more than a waiting game

With 1,200 owners controlling a fleet of over 167m dwt, Greece is a hot huntingground for third party managers hoping to bag a ship or two. But beware.Newcomers are not that welcome and if you want to make a name for yourselfyou had better start learning how to run your ships the way the Greeks do

been dynamic, adjusting as a whole to new developments, institutionaldevelopments, regulatory developments and technological develop-ments. “Of course from person to person, you might have different atti-tudes and different types of investment, but overall, I think there is thisability to adjust and take risks in an international game like shippingthat exists without captive markets.

“This is the strength, the ability to adjust without captive markets. Ifyou have captive markets, it is a bit easy going. Therefore, I think thefuture looks good because of all these dynamic elements,” he said.

It is this capacity to adjust which many believe sets the Greeks apartfrom other shipowning communities. “If you go back a number ofyears, Greek ship owners owned a larger proportion of the older ele-ment of the worldwide fleet so they built up skills managing overagedassets,” said Stamatis Molaris.

Then came increased regulation of the shipping industry, promptedby OPA 90, which forced many owners, including those in Greece, torethink the way they traditionally operated and managed their ships.

“The traditional Greek shipping company had no corporate structureto speak of, but when OPA 90 was enforced, people realised the regula-tors could come after them and seize not just their ships but their villas,yards and the whole family fortune could be at stake. So the liabilityconcern was vital in changing perceptions in traditionally-run compa-nies,” Mr Molaris said.

Globalisation also changed the thinking of so many industriesincluding shipping. Expansion of the world fleet and the sheer volumeof newbuilding orders meant there needed to be better qualified hard-ware in place which in turn put pressure on the human element of theoperation. Human capital suddenly became very important.

“This is one of the biggest challenges the industry will face in thefuture,” said Stamatis Molaris. “Where will we get 80,000 to 90,000seafarers in the next three to four years based on the strength of worldnewbuilding orderbook. It is not just a matter of getting the numbers,but getting qualified people.”

This was a point echoed by Mr Pappadakis: “I heard from one col-league that between now and the end of 2010, we will need 5,000 quali-fied chief engineers and 5,000 qualified captains. There might be a ger-rymandering of training and legal requirements but that can only happenat the expense of experience. That is where there might be a problem.”

So has the Greek shipping market adapted to these changes? “Ithink it has,” said the Quintana boss. “If you compare the ships theGreeks own today with those they controlled five years ago, there isno comparison. Greeks are controlling a major part of the double hulltanker fleet and have modernised their dry bulk fleets quite signifi-cantly. We have seen many traditional shipping companies that ➩


REGIONAL FOCUSGREECE

“Many Greeks like to operate the assets theyown and it is very hard to change that mentality. A Greek ship owner believes he is the best operator in the world. That is theperception and we have to live with such perceptions”Stamatis Molaris, President and CEO, Quintana Maritime

used to operate in the bread and butter dry bulk market jump intohigher value assets.”

Also, we have seen a recent phenomenon in some Greek ownersadopting a more public face as they seek to raise money on the USstock markets.

George Economou, Chairman and CEO of major bulk carrier ownerDryShips Inc, said he believed that both elements of today’s Greekshipowning community – the traditional family and the publicly-quot-ed – were equally sustainable.

“It’s the individual and the company structure that creates the money.There are a number of ways you can skin a cat: you can do it publicly

or you can do it privately. Some companies are doing both. “The Greek flag, thank God, has become very attractive now, espe-

cially for the tanker market as the Greeks traditionally have more offi-cers in the tanker trades. The problem is that we don’t have enough peo-ple going to sea so we don’t create the right inventory for the seafarersthat are needed. That’s going to be the big issue, not the flag anymore,”Mr Economou added:

Will these changes mean the traditional Greek shipping market willhave to rely more on third party managers?

“I do not know about the third party managers but definitely, we willhave to get qualified seafarers from different sources. I think the thirdparty management sector is an attractive option for companies that havegone public but for traditional companies I think it is not. That is mypersonal opinion but I might be wrong,” stressed Mr Pappadakis.

This was a point supported by George Gourdomichalis, CEO of G.Bros Maritime, who said that while third party managers can draw on“some business” in Greece, they are still a long way from being a dom-inant player in this market. “There is still tradition and know-how local-ly and within family offices that can provide what shipmanagementfunctions are necessary.”

Nicholas Fistes, Chairman of Intertanko and President of the newbulker and tanker outfit, Newfront Shipping, said that while there wasa shortage of seafarers worldwide, it was the abundance of shore-basedpersonnel in Greece that would work against third party managementinfiltration of the Greek owning market. Yet a lot of the younger andmore publicly-facing ship owners had realised that their “business is tolook at the commercial side of the shipping industry and let somebodyelse who knows the technical side better do the nuts and bolts. So thereis still a tendency for the new owners to subcontract this operation.Some of the traditional families are, however, turning their backs onthird party managers,” he said ➩



"It doesn't matter that we have seen a numberof good years in shipping because the industrywill always be cyclical. Our job is to try andsmooth out the cycles as much as we can bymaking investment decisions that are linked tothe long-term employment of our vessels. Weare trying to operate a different model fromtypical shipping companies so the majority ofour income is pre-fixed for a long period oftime. This kind of visibility makes us more sta-ble but we may be much less profitable duringthe boom times but on the other hand we havevery good protection against this cyclicality.

"Regarding the doom and gloom scenariofacing the ordering of new tonnage, we are ina period of extreme optimism and we see a lotof investment from the yards in new capacity.

It is a bit strange to see capacity requirementsfor 2012 onwards as being more or less thesame as was the case pre-2002/3. The differ-ence is we have experienced trade growthwhich is here to stay which is why I do notthink we will return to the old levels. At leastthe shipyards have learned from mistakes inthe past. They are trying to be more flexible interms of their expansion. The majority of theyards have expanded through non-core capaci-ty and joint ventures which they are better ableto trim when they meet a crisis. I am not say-ing we will not see a correction is ship pricesbut it all has to be seen in the context of theoverall costs of the industry such as raw mate-rials, and this sets a kind of different floor thanthe one that was around 10 years ago."

Dr John CoustasPresident and CEO of Danaos CorporationPUBLICDOMAIN

“It’s the individual and the company structurethat creates the money. There are a number ofways you can skin a cat: you can do it publiclyor you can do it privately. Some companies are doing both”

George Economou, Chairman and CEO, DryShips Inc.

According to the Mr Molaris, there may be aneed for third party managers when it comes tomanaging more sophisticated tonnage like tankersand gas carriers.

“Tanker companies are receptive to third partymanagers because it’s a way of outsourcing pollu-tion liability. Vetting concerns are also important.Third party operators are better equipped in myopinion to get tankers through the vetting approvalsystem. Oil majors will feel more relaxed know-ing they are dealing with quality third party managers,” he stressed.

But the challenge ahead for third party managers is understandinghow to merge their own management culture with those of their vari-ous clients, irrespective of whether he has two ships or 20 ships,claimed Mr Molaris.

This was a point repeated by Roberto Giorgi, President of V. Ships,who acknowledged that the identity of the Greek market has changedover the years.

“In the past six years we have been able to penetrate the Greek mar-ket with 31 clients and 105 vessels, of which 55 are fully managed. Theapproach to the Greek market is different because many of the shipowners know how to run a ship/purchasing or procurement departmentas well as we do. So we have to talk about customerisation. One thingwe have been lucky to learn from in the leisure sector is that in any oneday we have to service not one client but 1,000 clients. If you do notperform in the frontline in this sector, you are finished. The same con-cept of service has to be given to the Greek market. If you have cus-tomerisation and respect you will get the business.”

Conceding there is an opportunity for third party managers in Greeceas long as they adapt their management style to the Greek requirements,George Economou said it would take time for the two cultures to teacheach other. The opportunity is there, but it’s not going to be easy, he said.

“Mostly, the Greek owners are close to the ships in terms of commu-nications and the time spent around the ships talking to the people. It’san investment but also a closeness. A ship is not just something that is

far away in the distance. If the managers are going to attract substantialowners they will have to embrace that. It will be easier to attract thesmall owners,” he explained.

Nicholas Papalios, Director of Piraeus-based PrimalShipmanagement, claimed that some Greek owners were looking “atthe third party management sector from the other side” and setting upas third party managers themselves.

“This is something I am doing here as a management office and Ihave been talking to some other owners about taking delivery of somemore vessels. There are a lot of investors who buy ships, do not knowhow to run them and give them to managers to run for them. There isnothing wrong with that. Running ships is what Greeks know how todo best.”

Some of the publicly-quoted Greek companies like StealthGas andTop Tankers enthusiastically courted third party managers when theyfloated but are beginning to take their ships back in-house becausethey feel they can manage them more effectively and more cheaply.And, some say, more passionately.

“It is not a matter of passion; it is a matter of results. To a certainextent, the large third party managers have economies of scale, whichis great but from then on, I think the personal attachment in managingthat particular vessel is more important than the economies of scale.You will have a 5% to 10% lower operating expenses but one opera-tional mistake in today’s market might cost you 50% on a daily rate.There is no benefit for the owners,” said Mr Papalios.

Dr Alkis (John) Corres, Chairman of theHellenic Association of Maritime Economistsand Director of Newbuildings at NaftotradeShipping and Commercial, said he believedthere was a market in Greece for third partymanagers, but it will take time “due to thefears, which are not entirely unfounded, andwhich have to do with certain managers in thepast not exactly doing what they should havebeen doing, to put it politely.”

There has been a widespread hesitation toembrace outside managers, he stressed, for along time – 30 years or more. “The oppositehas been the case with the Cypriots running thelarge management companies, which of coursewere not Greek, but German, Danish, ➩



"There is still tradition andknow-how locally and within

family offices that can providewhat ship management

functions are necessary"

George Gourdomichalis,

CEO, G. Bros Maritime

“There are a lot of investorswho buy ships, do not knowhow to run them and givethem to managers to run forthem. There is nothing wrongwith that. Running ships iswhat Greeks know how to do best”Nicholas Papalios,

Director, Primal Shipmanagement

Norwegian but not Greek. In Greece thirdparty management has had a slow start. But itis progressing, slowly

“Third party management companies thriveon small ownership. When you have 100 shipsyou rarely consider letting anybody else runthem. When you have one or three ships itdoesn’t make any sense to set up any office torun these ships because it will cost a lot inoverheads. This makes you the first candidateto fall down if the market collapses.

“So it is a defensive and perhaps wise moveto have somebody else handle the manage-ment for you. And they can, perhaps, do it aswell as you would, or even better, provided hedoesn’t do ‘hanky panky’. By that I meankick-backs from the insurance, kick-backsfrom the agency and a little 50 cents on eachtonne of fuel and lubricants and crew suppli-ers,” he warned.

“Now, if the third party manager is able toprove his seriousness I think there is an enor-mous market here: Simply enormous,” he added.

As Stamatis Molaris emphasised, thirdparty managers have to place more emphasison the human capital. “In the past, it was veryimportant to have a Greek Master onboard, agood Master, a family operation. Now, thischanged because Greek owners could not findthe people to man the ships, they had to openup and put more emphasis on bringing in com-petent people. Not just on the ship but alsoonshore,” he said.

“I think that the environment in the Greekshipping market now is more receptive tothird party managers than it was in the past.And judging by the number of calls I am get-ting, I believe many reputable shipmanage-ment companies are trying to set up offices inGreece.

“Crewing is very important and is the onlyway to get a foothold in the market. If youhave your first meeting with a ship owner, thatis probably the first question you have toanswer. You should use that as a vehicle topenetrate his organisation further,” he said.

Whether that is enough to convinceQuintana Maritime to hand its ships over tothird party management remains to be seen.But rest assured, his phone will continue ring-ing with offers. ■


REGIONAL FOCUS GREECE

"I think the third party management sector is anattractive option for companiesthat have gone public but fortraditional companies I think itis not. That is my personalopinion but I might be wrong" Niki Pappadakis,

of AG Pappadakis and Chairman of Intercargo

Cyprus is a shipmanagement stronghold, an empire. Its fleet, intonnage terms, is the third largest in Europe and ranks tenth inthe world. Cyprus also boasts a proud record of never losing amajor client to a rival on the world stage. However, like allsuperpowers, Cyprus is not infallible. Whisper it quietly, but

chinks are beginning to appear in its formidable armoury. Following its accession to the EU in 2004, Cyprus won the right to

retain its tonnage tax scheme (a key incentive for ship operators on theisland ever since the first system was introduced in 1963). This was amajor battle to win, but it was not the end of the war. As history showsus all good things must come to an end.

The three year agreement, negotiated with the EU at the time ofaccession, ran out on May 1st this year. Now Cyprus, in line with allother EU member states, has to renegotiate its tonnage and corporatetax scheme as if it were a new Bill. The outcome of these discussionscould have a major bearing on the future of shipmanagement in Cyprus.The island's shipmanagement community feels a resolution is needed,and fast.

“If the tax is not renewed on the same terms companies will leave,”said Robert Thompson, Deputy Managing Director at UnicomManagement Services.

“At the moment the status quo remains, but if that doesn’t change bythe year-end then we could be exposed to some retrospective taxationissues – which would not be a clever idea. There would certainly be alot of thinking to be done if that happened. There are a lot of other com-


REGIONAL FOCUS CYPRUS

Cyprus is under threat as a shipmanagement hub. Its tax situation is tempestuous and adversaries,both old and new, are ready to pounce on the slightest sign of weakness. The crucial question is canCyprus keep pace with the international demands of modern shipmanagement or is theMediterranean superpower set to decline as its once loyal subjects start to vote with their feet?Andy Pierce reports.

“The government needs to get its act together ontaxation. If it gets that right, everything else will

fall into place. Cyprus, infrastructure wise, is stillfar superior to Dubai and probably much more eco-

nomical than Singapore. The packages you have topay there for your senior staff are significantly

higher than we would have to pay here”

Robert Thompson, Deputy Managing Director at Unicom Management Services

survival of aSUPERPOWER

petitive nations now who would welcome, with open arms, the numberof ships we manage as an island.”

An exodus is certainly possible. Shipmanagement companies arenotoriously mobile and can up camp in a matter or hours if they wishedto move to more favourable shores. And even if unsettled companiesdecide to stay, Cyprus’ status on the world stage could be diluted. Itwould be very easy for the island’s operators to move ships offshore toa more attractive fiscal centre.

"If a company says it will leave Cyprus it is a statement of how seri-ously it is considering the matter – but it does not necessarily mean itwill leave,” a leading industry voice explained.

Cyprus-based managers could conceivably set up a managementcompany outside EU territory. This new company could then, for asmall fee, subcontract business back to Cyprus. In such a scenario,“Cyprus will be the loser as the other company is my wholly ownedsubsidiary, and funds can be transferred back to Cyprus without any tax,as the profits are tax-free in the hands of the recipient,” he continued.

“There is a solution, but we don’t want to resort to these extremes.We want to convince the Cyprus government and the EuropeanCommission that if they do not approve [a new tax scheme] the Cyprioteconomy will be damaged,” he warned.

If the European Commission doesn’t agree to the industry’s terms,the potential fallout would be felt way beyond Cypriot shores. ThomasKazakos, Secretary General of the Cyprus Shipping Council, said:“This is a win/win or lose/lose situation. If we win, our governmentwins, our economy wins and the entire EU shipping fraternity wins. Ifwe lose then the outside EU shipping jurisdiction wins. If an open reg-istry and established shipmanagement base loses its battle, then, forsure, not all of the clients would remain within the EU.”

Failure is not something Kazakos is prepared to contemplate. He is

convinced the lessons learned since the last round of negotiations threeyears ago will increase the chances of success. “Because we knew aboutit for three years, we were not just sitting idle and glorifying our victo-ry, but learning from the difficulties we had in convincing our then col-leagues and partners in the EU, in the Government of member states,Commission officials and other shipowning associations aroundEurope.

“The years between 2004 and 2007 have passed by very quickly. Butwe have made good use of the time to prepare ourselves and maintainour title as the good student in the class. Whether or not the outcome ofour discussion will bring 100% success, I don’t know. I don’t have acrystal ball. But I am more confident than I was in years passed when Iwas going into the unknown without any additional support,” he added.

SMI believes the latest tax proposal intends to extend the incentivescurrently enjoyed by ship owners and managers in Cyprus to includecharterers and other shipping practitioners. This is a bold move, but isit enough? ➩


REGIONAL FOCUSCYPRUS

“Ships have moved out to the German KG system.But there is a lot of back office work undertakenin Cyprus. We still find it ideal for ship owners inthe West. We are international and Singapore isextremely important for us in terms of our international market. But I think Cyprus is betterfor instance than the Isle of Man or Bermuda andthese more expensive locations”Nigel Cleave, Chief Executive Officer, Epic Ship Management

Andreas Droussiotis, Chief Executive Officer of Bernard SchulteShipmanagement (Cyprus), is not convinced. “Surely, there are a num-ber of areas where the Government could offer more incentives in orderto make the industry more competitive. At the same time, Cyprus couldincrease the income out of it, either directly or indirectly,” he reasoned.

He acknowledges there are limitations to what can be offered in thenew EU era, but believes an industry which recruits 6,500 people everyyear (4,000 of which are local) deserves more support. “The govern-ment could, for example, offer subsidies in certain areas for personneland educational programmes. It could also reduce the tonnage tax forCyprus-registered vessels. We have been very strict with regulations butwe could have imposed further reductions to owners under the Cyprusflag if a vessel was managed from Cyprus,” he explained.

Joining the EU has done more than limit the arsenal of businessincentives at Cyprus’ disposal. “Cyprus is not a cost effective place ofoperation. The salaries of the staff are quite high, the taxes are quitehigh and the Cypriot Pound is very strong,” explained KishoreRajvanshy, Managing Director of Hong Kong-based FleetManagement.

The financial uncertainty are further complicated as Cyprus is set tojoin the Euro Zone. However, this did not put the Fleet boss off whenhe was looking for a European operating base. The company opened itsfirst Cyprus office in June 2007. “We felt that Cyrus, as an establishedcentre, would give us access to ship owners located in theMediterranean – Greece particularly,” he said. “It also gives us a cen-tre from where superintendents can visit the ships in the Mediterraneanwithout having to travel from Hong Kong and India. That saves moneyfor the owners as the money for access to the ship is reduced.”

Serghios Serghiou, Director of Merchant Shipping at the Ministry ofCommunication and Works, believes being part of the strong EU mar-itime cluster has increased both the quality and the image of Cypriotshipping. The flag’s move from the Black List to the White List of theParis MOU supports this claim. However, as Dirk Fry, President of theCyprus Shipping Council and Managing Director of ColumbiaShipmanagement, acknowledges, one of the motivations for Cyprusjoining the EU was to overcome the Turkey trade ban, a situation whichstill shows little sign of resolution.

“When we joined the EU we had very big hopes that the Turkish banwould be lifted. There have been several attempts at a resolution but weare still in the same situation we were in 1987. The latest state of affairsis the talks have been frozen and nothing will happen before 2009,” MrFry revealed. ➩



“Cyprus is small and, sometimes, small is beautiful.We have a direct relationship with our ministersfor shipping, our directors and even our parliamentarians. If I need to say something to theminister, I pick up the phone and talk to him. Wemeet on a regular basis and it is a mutually beneficial relationship. We help our government and the government helps us to take the right policy decisions for Cypriot shipping in general” Thomas Kazakos, Secretary General, Cyprus Shipping Council

"The actions of other EU member states are doing little to promotethe Cypriot cause. France's new President Nicolas Sarkozy is totallyagainst Turkey joining the EU. That will take any leverage away fromCyprus that we may have had in the past. If Turkey isn’t going to get in,Cyprus can’t then play the EU trump card,” Mr Thompson said.

And the EU-induced obstacles do not stop there. “It has been a majornightmare for us that third nations require visas and permits to workhere," he added.

"The red tape has been absolutely abysmal. People who have beenliving and working on the island for 10 years have been grounded forsix months because they couldn’t get a resident’s permit. This is a majorheadache for us. It’s a pain more so for us as we are a Russian compa-ny, but it does affect other managers as well.”

Even if the visa issues were resolved, it may still prove difficult forship managers to attract expatriate labour to Cyprus. With the demise of'duty free cars' and many former tax benefits there is no longer any rea-son for expatriates working in northern Europe to move to Cyprus,explained Captain Peter Bond, General Manager at InterorientNavigation.

“We are finding it difficult now to get key positions filled. This issomething the government needs to look at to find out how it can helpthe industry to attract the technical expertise it requires, whether that bethrough tax breaks, social security or some other means.

“Unfortunately, the local labour market can’t provide enough for theneeds of the industry here. Eighty five percent of our staff are Cypriot,but the key positions are still held by expatriates. I know there is ashortage of officers at sea but it’s the same in the shore-based posi-tions,” Captain Bond added. ➩



While Cyprus faces many battles on the home front, there are strongforces in the east waiting to exploit the slightest sign of weakness. FromCyprus’ point of view this is not so much David preparing to slayGoliath as Goliath duelling with an equally strong and more youthfuladversary.

“Singapore certainly has a more aggressive stance on promotingshipmanagement and ship ownership. It is very much on the boil and iskeen to grab the business,” said Nigel Cleave, Chief Executive Officerat Epic Ship Management.

Dubai Maritime City has been equally as bold. It has stated an ambi-tion to be a leading shipmanagement centre within five years. Closer tohome, Gibraltar has claimed it wants to be a shipmanagement hub with-in 10 years. With this threat on the horizon, Cyprus could be forgivenfor running scared. But it couldn’t have built its shipmanagementempire if it didn’t have the stomach for a fight, and it is in no mood tolet its prized managers go now.

Dirk Fry, for one, is not concerned about the young upstarts in Dubai.“I was talking to a colleague of mine recently. He was heavily criticalabout the increased costs in Dubai, particularly the increased cost ofexpatriate personnel. Maybe the agents’ situation in Dubai is more com-petitive than the one we have in Cyprus, but if my costs are gettinghigher and higher by the day I’m not to sure it would be in my intereststo relocate there,” he said.

“Cyprus is an established and large maritime cluster and it is morecompetitive than other places in Europe. We have the infrastructurehere. Sure, it would always be nice to get more incentives, and, yes, weare pushing discussions for additional areas where we feel Cyprus couldbecome more competitive.”

Serghios Serghio is equally dismissive of the threat posed by othercentres. He knocked back the suggestion of the island’s managers leav-ing at a stroke and remains convinced Cyprus retains key advantagesover its rivals.

“I believe Cyprus is in a very good position because Dubai andGibraltar don’t have the unique advantages, the infrastructure andexperience, we have here. We have common working hours with bothNew York and Japan. This isn’t the case with other centres. We are closeto Europe, the Far East and Dubai,” he added.

Not everybody is so dismissive of the rival centres. Thomas Kazakoswelcomes the competition, believing it will have a positive impact onfuture EU policy. “Not only are Singapore, Dubai and Hong Kong ourcompetitors in the shipmanagement industry but there are other centresas well where the competitive legislative framework is comparable andin some parts even better [than Cyprus].

“It is a good thing that we have healthy competition because it helpsus to convince the government and the EU of fair international compe-tition. When we tell the government and the Commission that in Dubaithey do this and in Singapore they do that, they have to react in a posi-tive way. If we were always seen to be the most attractive all-roundoption, then, of course, there is no incentive for the EU or our own gov-ernment to be on their toes and make sure that we are staying within thecompetition level.”

Fighting battles on so many fronts may have taken its toll on Cyprus.“We need to see more activity in terms of attracting new business.Between you and me: Cyprus has lost its way a little bit. It has to getmoving again. It is complacent and has lost that get up and go,” onehigh-profile manager reasoned.

Dirk Fry was quick to dismiss such claims. “I don’t believe Cyprushas become stale or complacent. We are very active to assist all tradeassociations in doing the right thing on a global scale. Whether this isin reduction of air emissions or the criminalisation of seafarers, theCypriots are there fighting for the industry interests. If anybody says weare a little complacent, maybe they should focus their attention to besure that their company has not become complacent.

“It is always easy for a person from within the industry to say: ‘Iwant this, that and the other’. It is not always so easy for people withinthe government to satisfy everybody every time somebody comes upwith a good idea, or something an individual thinks is a good idea.

“But we have a very good relationship and our interests are in good


REGIONAL FOCUS CYPRUS

How has growth in German KG system impacted upon you?

“It is not quite correct that companies have movedfrom here to Germany. They have set up offices inGermany or they have strengthened their officesthere. It is not correct that everybody should forget about Cyprus. We are growing our businessdown here and the boys in Germany, who are partof us, are growing their business’ there”

Dirk Fry, President of the Cyprus Shipping Council and Managing Director of Columbia Shipmanagement

hands with our government partners. This does not necessarily mean itwill accept everything we dream up. But it will certainly considerthings and if it feels a proposal is good for Cyprus, or will enhance thecompetitiveness of the industry, I am sure we will have its support.”

Andreas Droussiotis also played down talk of complacency, attribut-ing any perceived lack of action to the inertia of government. However,with presidential elections looming, Mr Droussiotis believes now couldbe the time for the ship managers of Cyprus to get some political assur-ances. “Perhaps now with the election campaign underway we will bemore successful with our requests. The election is in February nextyear, but the campaigning has started already. It is not really the out-

come of the elections which is important, it is how we can use themnow. We have three candidates and because each one needs votes youcan get commitments from them. If we get commitments from all ofthem, we will succeed no matter what the result is,” he smiled.

In the next few months an important chapter in the history of ship-management in Cyprus will unfold. Whether the island has becomeuncompetitive and stale will be resolved if its managers vote with theirfeet. But before we write off Europe’s shipmanagement superpower,perhaps we should all remember that what doesn’t kill you makes youstronger. Mr Droussiotis, for one, still sees a bright future for ship man-agers in Cyprus. “Our strength will be in the quality. The shipmanage-ment companies here are quality, all of them. And I believe, judging bythe number of years we have been in business, that we will only becomebigger and better.” ■



“Surely, there are a number of areas where theGovernment could offer more incentives in order tomake the industry more competitive. At the sametime, Cyprus could increase the income out of it,either directly or indirectly”

Andreas Droussiotis, Chief Executive Officer of Bernhard SchulteShipmanagement (Cyprus) What can Cyprus do to protect itself from the

threat of emerging centres?

“From what I understood there is a willingnessto discuss the future of the maritime industryin Cyprus and connected laws on high govern-mental level (Council of Ministers) also in com-parison with other centres of shipmanagementincluding Malta, Dubai and Singapore.Sometimes it seems that some ministries whoare not directly involved in maritime affairsare not aware of the important role the mar-itime industry plays in the Cypriot economy.”Bernt Gienskey, Managing Director, I. C. Shipmanagement

According to recent Clarkson statistics, as of October 1st

2006, the 214 strong fleet of LNG carriers with a totalcarrying capacity of almost 26 million cubic metres (cum) is set to grow by another 137 vessels, aggregating afurther 23m cu m. And, in this highly sophisticated

shipping market, the ships are undergoing some pretty fundamentalchanges in design.

Most noticeable is the increase in size. The standard size for conven-tional long-haul LNG carriers used to be around 135,000 cu m, increas-ing slowly by about 10,000 cu m in recent years, to around 145,000 cum. Now these vessels are about to be superseded by a new range of farlarger ships. At least six 265,000 cu m LNG carriers, for example, havebeen ordered recently at South Korean yards by the Qatar GasTransportation Company which is now thought to have a total of 22ships of more than 200,000 cu m on order. Next there is the question ofpropulsion. Traditionally powered by steam turbines, LNG carrier own-ers have largely switched to diesel power in one form or another.

The repair of the world’s fleet of large LNG carriers is lucrative.Only the largest yards in the Far East, Middle East and Europe areinvolved. The process of winning such contracts starts with yard andservice audits from the owner and operator and normally also includessome type of training or licence with one of the containment designers,such as Moss Rosenburg, for spherical tanks, orGaztransport/Technigaz (GT) for membrane systems.

Last year was a record year for LNG carrier repairs in Singapore’sSembawang Shipyard, having repaired a total of 13 such ships. Thiscompares with 10 LNG carriers repaired the previous year, which wasthe most for any shiprepair yard in the Singapore area.

Dubai Drydocks repaired 11 such vessels; Singapore’s KeppelShipyard repaired nine; France’s Sobrena, Brest had five; Spain’sNavantia also five; Malaysia Marine & Heavy Engineering (MMHE)three; Japan’s Kawasaki Heavy Industries with two; Germany’s Blohm+ Voss Repair also two with Portugal’s Lisnave.

France’s Sobrena, Brest, is most probably the most successful of theEuropean shiprepair yards, through its ‘alliance’ agreement with ShellInternational for the repair of owned and managed LNG carriers oper-ating in the western hemisphere. This is similar to Singapore’sSembawang Shipyard, which has the same agreement for the easternhemisphere.

This year the LNG repair market is even more active. During late2006 and early 2007 Shell’s 81,472 grt LNG Port Harcourt was inSobrena for 60 days undergoing a life-extension refit. This was fol-lowed by Shell’s 114,354 grt LNG Rivers and her sistership LNG Sokotoboth during May this year. Also later this year work will be carried outonboard the LNG Lagos, which is a sistership of the LNG PortHarcourt.

In Singapore’s Sembawang Shipyard, work was recently completedonboard Shell’s 94,934 grt Granatina, and work is expected onboardthe 88,581 grt Galeomma, which is due to be drydocked in Sembawangduring August this year, and the 88,938 grt LNG Delta, also due inSembawang later this year.

Navantia has already repaired the Golar Barber’s 95,879 grt GolarFreeze and the 96,235 grt Gimi, as well as the 81,265 grt carrier LNGRamdane Abane from North Africa’s Hyproc Shipping Company.

Meanwhile, Singapore’s Keppel Shipyard has had a busy start tothis year with work from the LNG repair market – Golar Torm’s111,835 grt Golar Mazo was drydocked during April this year, andQatar Gas’s 111,184 grt Doha and the 111,161 grt Al Wajbah, bothtechnically managed by MOL, have also been drydocked. One of thelargest projects from this market due this year will involve the partiallife-extension of NYK’s 102,390 grt Banshu Maru, which is expectedin the yard within the next month for a stay of some 50 days. KeppelShipyard also has the contract from Golar to convert a yet-to-be-named LNG carrier (Moss Type) to a Floating Storage andRegassification Unit (FSRU).

The LNG repair market is very important to Dubai Drydocks, threesuch vessels from NYK (Singapore), Oman Gas and K Line havealready been repaired this year – the 94,058 grt Raahi, from NYK


SHIP REPAIR LNG

Thedash forgasBy Alan Thorpe

The orderbook for large LNG carriers is substantial across mostsectors of the world fleet. However, in the highly capital intensiveLNG field, the fleet is set almost to double over the next few years

The standard size for conventional long-haul LNG carriers used to be around135,000 cu m, increasing slowly by about10,000 cu m in recent years, to around145,000 cu m. Now these vessels are about to be superseded by a new range of far larger ships

(Singapore), and the 111,124 grt Al Bidda from Mitsui/OSK. Alsobooked in is the 111,128 grt Al Rayyan for MOL.

Recently in MMHE was the 94,446 grt LNG carrier Puturi FirusSatu, which is the third LNG vessel in for repair this year (2007), allcoming from MISC. Another four such vessels are due, two also com-ing from MISC.

Lisnave has already repaired Exmar’s Methania and Unicom’s SCFArctic the 83,068 dwt LNG carrier LNG Oyo, from Bergesen WorldWide Gas.

The Hoegh Gandria is currently serving the last year of a charterwith Indonesia’s Pertamina, and it is expected that, after completing thischarter, she will possibly be converted to a either a ShuttleRegasification Vessel (SRV) or a Floating Storage & RegasificationUnit (FSRU). Hoegh LNG is currently talking to Brazil’s Petrobras forsuch a FSRU and the Hoegh Gandria would be an ideal candidate.Hoegh LNG is also looking at ordering two SRV for a charter with SuezLNG for the Massachusetts Bay project off Boston.

MMiiddddllee EEaasstt eexxppaannssiioonnThe searing pace of Middle East expansion in LNG-related business hasprovided a strong catalyst to the ship repair sector as various principalsscramble to integrate vertically and win a slice of the lucrative futureLNG repair market. Leading the dash to develop new shipyard facilitiesis the Doha-listed Qatar Gas Transportation Company (QGTC), knownlocally as Nakilat, in which Qatar Gas has a substantial stake.

Barely more than two years old, QGTC is completely candid aboutits ambition to become the world’s leading carrier of LNG and a promi-nent entity in the carriage of liquefied petroleum gas and condensatestoo. And certainly, the eye-watering pace of its tonnage acquisition pro-gramme indicates it does not intend to waste any time – already, thecompany either owns or has shares in 44 LNG carriers.

However, QGTC does not intend to pay out millions of dollars tothird parties in future repair bills on its fleet which, it is envisaged,could comprise of 60 vessels by 2010 and as many as 100 by 2015.And, in a joint venture with Keppel Offshore & Marine, it is develop-ing a new repair yard at Ras Laffan which is intended initially for therepair and maintenance of its LNG tankers, as well as other owners’tonnage in due course. The new yard, due to be commissioned in 2009,is to be developed in four phases at a cost thought to be around $500m.Facilities there will include two large drydocks and a floating dock.

The fact that the yard will be conveniently located at one end of aseries of constant LNG trades extending for decades into the futureensures an immediate and steady base-load of business for the newfacility. But those behind the new facility are believed to be designingit with a capability for new construction in the future and it is under-stood that rig building and the construction of offshore service vesselscertainly feature in the medium to long-term plan.

Meanwhile, Omani-Government owned Oman Dry Dock has recentlyannounced its intention to spend up to $400m on a new repair facility inthe south of the country, also to be commissioned in 2009. This time,development of the facility is being undertaken with assistance fromSouth Korea’s Daewoo which will provide management, administrationand technology transfer in due course. The new yard, at Raw A’Duqum,is intended to focus on the repair of tankers and LNG carriers.

It is understood that the design of the Omani facility also envisages thepossible undertaking of new ship construction in the future. Facilities willinclude several kilometres of breakwaters, port facilities and quays with16m water depth alongside. Repair capacity is not clear as yet, however,but recent trends in LNG vessel size are unlikely to have gone unnoticed.

Qatar’s QGTC has focused its newbuilding contracts on SouthKorea’s leading ship construction companies – Daewoo, Hyundai andSamsung. At the last count, the company had 24 LNG carriers on order,amongst them the largest such vessels in the world, at 265,000 cu m.QGTC is thought to have six of these so-called “Q-max” vessels onorder, three slightly smaller units as well as seven “Q-flex” vessels,each of 216,000 cu m.

Other Middle Eastern governments have also made clear their inten-tions to develop new ship repair capacity. Saudi Arabia, for example,has indicated that it plans to develop a specialist offshore and rig repairfacility at Dammam, while the Islamic Republic of Iran Shipping Line(IRISL) and the Offshore Shipbuilding Company of Iran are co-operat-ing in the development of a new repair facility about 20 miles west ofBandar Abbas. Meanwhile, it has been reported that the drydock atBasra in Iraq may also be refurbished. While it is unlikely that thesefacilities will be targeting the LNG sector specifically, they will certain-ly wish to market their services in the rapidly expanding LPG andchemicals sectors. ■


SHIP REPAIRLNG

The searing pace of Middle East expansionin LNG-related business has provided astrong catalyst to the ship repair sector asvarious principals scramble to integratevertically and win a slice of the lucrativefuture LNG repair market


NEWBUILDING

KOREAN YARDS WININ HOMOGENEITYSTAKESBy David Tinsley

Rather than follow the trend towards ultra-largecontainership (ULCS) tonnage in excess of10,000teu, Hapag-Lloyd has opted for homo-geneity and attendant operational cost benefitsby implementing a major new stage of fleetinvestment based on vessels of 8,750teu capaci-ty. The eight newbuilds entrusted to HyundaiHeavy Industries will be compatible withHapag's most recent ships used on express serv-ices between Europe and Asia. "We have hadvery positive results with the five units wealready deploy," explained Michael Behrendt,Chairman of the executive board. "They are effi-cient and incorporate state-of-the-art technology,and they can be flexibly deployed on variousroutes if required by the market situation," he added.

The further series of 103,000dwt vessels willhave main dimensions of 335m x 43m and arescheduled to be delivered within a relatively nar-row timeframe, underscoring the huge capabili-ties of the Korean shipbuilding contractor. Twoof the 8,750teu boxships are due in December2009, and the remainder are expected to behanded over within the first half of 2010.

Hapag-Lloyd has sealed its latest contractagainst the backcloth of an anticipated 40% risein box traffic in the medium-term. Economicresearch institute Global Insight forecasts thatglobal transport volume should surge to 138mstandard containers by 2011, compared with98m in 2006.

Hyundai was also understood to be among thecontenders, at the time of writing, for a series ofro-ro vessels to the account of Italian operatorAtlantica di Navigazione, part of the continual-ly-expanding Grimaldi Group Naples. Theplanned newbuilds would be of around 200mlength and 4,000 lane-metre capacity, and arerequired from 2010 onwards.

Earlier this year, Grimaldi awarded HyundaiMipo a five-ship deal worth around $430m andentailing five ro-ro multipurpose car carriersembodying a design similar to that of five shipsalready on order at the Uljanik yard in Croatia.Each of the 25,000dwt Hyundai Mipo series willcater for about 800 containers, 2,000 linearmetres of ro-ro cargo, and 2,000 cars and vans,in keeping with the Italian group's philosophy ofro-ro flexibility and requirements of the group'sAtlantic services. Self-sustaining properties asregards the handling of containers, oversizedfreight and project cargo will be conferred bytwo 40 tonnes cranes, while the stern ramp willallow piece weights of 250t.

As a prime mover in the intra-Europeantrade, and champion of the 'Motorways of theSea' concept, the Grimaldi group recently exer-cised the two options appended to its 2005 con-tract with Fincantieri for two cruise ferries andtwo ro-pax vessels. The latest project gives afurther boost to Fincantieri's workload, andendorses the organisation's strategy and effec-tiveness in focusing on several core areas of

higher value-added construction. Grimaldi hasuntil late 2007 to decide whether the optionswill be ro-pax or cruise ferries.

The initial pair of 180m ro-pax vessels aredestined for Grimaldi Compagnia diNavigazione, and will each take 1,000 passen-gers and 2,700 lane-metres of vehicles. The twocruise ferries in the original order are to beplaced with the group's Industria ArmamentoMeridionale. Following a change of specifica-tion, entailing an increase in size, each ship willbe 225m long with provision for 2,300 passen-gers and 3,050 lane-metres of freight.

Chinese shipbuilding's surging position in thebulker sector has reached a new milestone withthe contracting of a 300,000dwt ore carrier forNYK Line of Japan. Booked at Nantong CoscoKHI Ship Engineering, the order for the mam-moth vessel follows NYK's agreement withBrazilian producer Companhia Vale do RioDoce (CVRD) for long-term transportation ofiron ore exports. Under the 20-year pact, NYK isto ship 1.3m tonnes of ore per year from Brazilto China, starting from 2011, when the VLOC(very large ore carrier) is due to be delivered.

It is reported that another Chinese builder,Bohai Shipyard, has contracted four VLOCs onthe strength of a long-term shipment deal con-cluded by CVRD with BW Bulk.

Meanwhile, Hudong-Zhonghua Shipbuilding(Group) has won export orders covering twobulk carrier types of 87,000dwt incorporatingthe IACS Common Structural Rules (CSR). Oneof the ships will be of double-hull configurationand the other will be of single-hull construction,and the designs are among the first from Chinato be CSR-compliant.

Iolcos Hellenic Maritime Enterprises ofGreece has booked four 87,000-tonners indouble-hull format, while compatriotGleamray Maritime has ordered four single-hull newbuilds. Both series of ships will bebuilt to Lloyd's Register class, and the leadvessels in each quartet are due to be handedover during 2010.

Part of China State Shipbuilding Corporation(CSSC), Hudong-Zhonghua is headquartered atPudong, with production along both sides of theHuangpu river, to the east of Shanghai. It is todate China's only builder of LNG carriers, and issaid to be one of the few shipyards in China withsignificant in-house design capability.

London broker sources said in May thatworldwide dry bulker orders had risen since thestart of 2007 from 80m to 100m dwt, represent-ing an increase to 34% of the existing bulk car-rier fleet. ■

NEWBUILDCONTRACTS

Tie dye, bell-bottoms, zippered jumpsuits and infamouslyflamboyant perms are all relics of the past about which mostof us would rather forget. However, not everything that wasintroduced in the 1970s should immediately be cast off into

the mists of time. Like platform shoes and other fashion disasters, thedecade’s ideas have a knack of coming back into vogue.

This is certainly true of environmental salvage awards. First pro-posed in 1979, the concept of an environmentally-based monetaryaward for salvors has been a staple of conversation at the InternationalSalvage Union (ISU). But it only made it onto the open debating tablefor the first time in July 2007 when a cross industry panel sat down todiscuss it.

“We are looking at providing some form of reward to salvors withregard to preventing environmental damage and, at the same time, per-haps providing some kind of reward mechanism for the place which isnominated or becomes a place of refuge,” ISU Secretary General, MikeLacey, explained.

With environmental pressure groups a regular menace at the site ofhigh profile marine casualties and the cost of environmental damageoften exceeding the value of the ship and cargo, environmental pressureon salvors is at an all time high. As a result many believe the time isright to start rewarding salvors for their green endeavours.

This would be a step change in the way salvors are paid. However,there is feeling that it is long overdue. “Proper professional responsecan provide a material improvement and protection of the marine envi-ronment and environmental protection should be rewarded,”

said Dick Fredricks, Executive Director of the American SalvageAssociation.

While the Article 14 SCOPIC (Special Compensation P&I Clause)Clause, which first appeared in the 1989 Salvage Convention, offerssalvors a means of covering their expenses, Mr Lacey argues that it iscertainly not a reward mechanism and the system is in need of updating.

“The historical approach to salvage is to pay the salvors simply forsaving property. But the current concern of governments is not so muchsaving property but preventing damage to the environment. That is pre-cisely what the salvor does. If he is successful in re-floating a casualtyor stopping the casualty from going ashore, then, as night follows day,he is taking action to protect the environment. We are simply sayingthat the time has come, in the 21st Century, to review the historicalapproach to salvage and still keep up with the reward for saving theproperty, but remove from that property reward an elemental assess-ment of a pollution prevention reward,” Mike Lacey reasoned.

The introduction of environmental salvage awards would obviouslyhave winners and losers – with property insurers gaining new benefitsand the liability insurers likely to pay extra costs – however, it is expect-ed to lead to a reduction in the overall costs relating to a casualty.

With tugs on station a rarity, and ever-larger ships making lifeincreasingly difficult, salvors argue that a change in the payment sys-tem is needed if they are to maintain a high quality response capability.A drop in the number of marine accidents and an expanding web of reg-ulations pose further difficulties for the industry.

“Salvors are travelling further and further to get work,” said PeterRobinson, Commercial and Logistics Coordinator at the Resolve MarineGroup. “Consequently, when you are ready for an emergency response,

yes, the people will be there, but the equipment and salvagetugs may not be as they may be off performing a deep-sea

pull. As a result there may only be harbour tugsaround which will not be the most suitable equip-ment for a salvage job. The underwriters are real-ising this more and more. The situation can onlybe addressed with remuneration.”

It is also suggested that a change in the awardmechanism would help reduce the environmen-

tal damage caused by marine casualties, even if a100% reduction is unrealistic. “Environmental sal-vage would encourage salvors to do things that theyare perhaps less inclined to do now and, perhaps,salvors will get called into more casualty operationsearlier than they currently do. When a ship has a problem there is a tendency for the salvor tobecome aware of it, not quite at the point of no

return, but at a point where they could havedone something constructive at an earlier

stage,” Mike Lacey argued.


TRADE ANALYSIS TOWAGE & SALVAGE

Salvors on green offensive With environmental pressures on salvors at an all time high, is it time for theindustry to put its money where its mouth is?

“Of course, that applies particularly when it comes to pollution.Ideally, the coastal states should pay for any environmental awardbecause they are the ones who get the immediate benefit. The coastlinedoesn’t get polluted and they are saved the horrendous expense of aclean-up,” he added.

The concept of environmental salvage is not backed by everybody.The P&I Clubs have been particularly vocal in their resistance to theidea and, despite their involvement in the recent discussions, there is lit-tle sign of them changing their position.

“In effect we would be introducing a new head of award,” explainedHugh Hurst, member of the International Group Secretariat. “We don’tbelieve it is necessary. Our view is that the concept behind the environ-mental award is to increase the encouragement to salvors. We certainlybelieve that protection of the environment, or any threat there may befrom oil pollution to the environment, is more than adequately takencare of by the introduction of SCOPIC. The SCOPIC Clause is thereprecisely to encourage salvors to ensure that the environment is notdamaged. At the last International Group Managers’ meeting on 6thJune the SCOPIC rates for tugs, equipment and personnel wereincreased quite substantially.

“Of course, salvors also do very well out of wreck removal. So wecertainly don’t see environmental salvage as a means of ensuring thereis less of a threat to the environment.”

Interestingly, while the International Group believes environmentalsalvage goes too far, others argue that it doesn’t go far enough. NicolasTsavliris, President of Hellenic Salvage & Tug Owners Association andPrincipal of the Tsavliris Salvage Group, believes that the ISU stance is“too narrow”. He suggests the next generation of awards should extendbeyond green issues to include the prevention of other damages.

Under his scheme, which he has dubbed “liability salvage”, it is pro-posed that salvors should be paid for preventing a liability or prevent-ing a loss. In a successful salvage operation this might include:• preventing a casualty from being wrecked or causing massive

pollution• averting significant pollution clean-up expenses and fines • averting expensive wreck removal or cargo disposal costs• averting substantial pollution damages and claims• averting enormous (incalculable) environmental damage

This move may sound extreme. However, Mr Tsavliris believes it isa necessary step to “produce much needed funds to an otherwise ➩


TRADE ANALYSISTOWAGE & SALVAGE

Salvors are falling victim to an ever increas-ing number of ship owners and insurers whoare exploiting a legal loophole and claimingsovereign immunity for commercial cargos inorder to avoid paying salvage awards, it isclaimed.

The trend, which does not involve any P&IClubs from the International Group, hasbecome an epidemic according to NicolasTsavliris, President of Hellenic Salvage & TugOwners Association and Principal of theTsavliris Salvage Group.

“There is a mentality to avoid paying thesalvor. People want to benefit from his servic-es then they lay low and don’t pay,” MrTsavliris said.

In what he claims is owners and insurers“laughing at the system”, Mr Tsavlirisexplained that cargoes were being broughtand shipped as commercial commodities and,after the salvage service had been rendered,interested parties were claiming that the ship-ment had a humanitarian purpose. In such

cases owners and insurers are not liable to paysalvage awards.

Such practice is a particular problem in“Mesopotamian countries”, Mr Tsavlirisexplained. However, he stressed that it isbecoming increasingly common for Europeanlawyers employed under the Lloyd’s Forumarbitration to drive the responder immunitydefense on behalf of European reinsures –even if the cargo interests and their govern-

ment’s hadn’t originally taken the same line. “I would call this a disgusting develop-

ment. We have the cargo owner, the peoplewho benefit from the salvage, and even thestate wanting to pay the salvor. However,London lawyers [acting for reinsurers] wantto defeat the claim. The original underwritersand cargo want to pay, but the reinsurer inLondon will say we want to play with this andfind other arguments,” Mr Tsavliris explained.

The pseudo sovereign immunity epidemic

Figures and graph courtesy of the International Salvage Union Annual Pollution Prevention Survey, 2006.

dwindling industry, which undoubtedly offers very valuable services tothe maritime community.”

He proposes that as the P&I Clubs benefit the most from the salvor’sability to remove risks, they should be the ones to cover the cost. Healso suggests that an international purpose fund be created or changescould be made to existing applicable international conventions toenable the “funds” to cover all the liabilities.

Liability salvage has the support of industry colleagues, Mr Tsavlirisclaims. And with criminalization an ever-present threat to salvors, he is

convinced there would be a greater price to pay if the system is notadopted.

“Does the maritime community want a healthy salvage industry,capable of dealing with large, complicated, dangerous casualty situa-tions or not? Put another way: Do we want a competent salvage con-tractor to be there when calamity strikes, intervene and prevent a multi-billion dollar mess?”

As history tells us, following fashion has its pitfalls. But refusing to fol-low the crowd can be a more effective in driving progress forward. ■

TRADE ANALYSISTOWAGE & SALVAGE

Salvage services in the US are in line for amuch-needed boost following the suggestionthat the US Coast Guard (USCG) is to imple-ment the long awaited salvage and fire fight-ing regulations within OPA 90 by January2008, SMI has learned.

Updating the much criticised salvage por-tion of OPA 90 – which many believe assistedthe existence of less reputable salvage compa-nies – will bring lasting benefits to the envi-ronment, vessel owners and insurers, DickFredricks, Executive Director of the AmericanSalvage Association (ASA) claimed.

He said: “It is a long time in the coming –actually it is 16 years in the coming – but theUSCG now, to its credit, is nearing the com-

pletion of its work and it is thought the regu-lations will be promulgated not later thanJanuary 2008.”

This is an important breakthrough forsalvors in the US. Until recently it was thoughtthe close links between the BushAdministration and the oil majors, allied withthe changing focus of the USCG, would pre-vent the legislation from seeing the light of day.

The existing salvage and fire fighting element of OPA 90 has been accused of “lacking teeth” as there is no set standard towhich a salvor must conform before beingnamed as a “qualified Individual” in the OPA 90 Vessel Response Plan. However, thisnew development should serve to put an end

to the existence of so-called “paper salvors”. “Today, there are probably 25 ‘legitimate’

American salvage and fire fighting contrac-tors. However, there are more than 250 sal-vage contractors and 190 fire fighting contrac-tors presently named in the Vessel ResponsePlans,” Mr Fredricks explained.

“The regulations will set the standard forsalvage and fire fighting response which hasnot existed, not even today, and will cause theship owner to name a salvage and fire fightingcontractor in its Vessel Response Plan after firstconsidering 13 criteria. Salvage and fire fight-ing companies which will be engaged in thefuture will be credible, legitimate and capablecontractors – this has not always been the case.

New rules to sink “paper salvors”

Jacques Michaux is a diplomat. He is tall, well dressed, highly edu-cated and sophisticated with a friendly and confident demeanour.But he is an EU shipping regulator and these guys have a habit ofsaying what they mean. Their words can be reassuring and under-

standing on the one hand but beware of the sting in the tail.“People are still questioning regulation because they are against reg-

ulation. You can’t do anything with these people. We live in a worldwhere there are regulations. The most advanced civilisations are built onlaw and order and regulations are there to improve transparency and toenable infringement procedure to be launched.”

Harsh words indeed. But as he also told delegates attending SMI’s 1stInternational Ship Management Summit in Oslo, not all is doom andgloom. Oh, and watch out for the sting. It’s fast coming.

“I am happy to hear some of your speakers say they are happy withthe current regulations. The shipping industry is in a much better posi-tion than it was 10 years ago in all respects: quality wise, technologywise, efficiency wise and regulations play an important part in thatprocess. I was pleased to hear a lot of your speakers share that view.

“The only complaint I can make concerns the attitudes of some peo-ple, in particular, my ‘colleague’ this morning from ABS who said thatpeople in Brussels do not understand class. This is the kind of commentI don’t like because it is so arrogant for an industry to say we don’t knowwhat we are talking about in Brussels. They should not say this, theyshould come and explain and present their views and try to come up withsound arguments.

“We are not stupid; we will listen to you. But you need to understandthat you are representing one interest and as a regulator we have to lookat the common interest and the shipping industry is very complex. Sopeople who have this arrogant attitude are not welcome. We need peo-ple who are constructive and positive and who want to try to improvethe relationship between the industry and the regulators, who are thereto help.”

It was the comments of William Sember, President and COO of ABSEurope, that fired the regulator’s ire. But listening to Sember’s views,you can sense his passion in defending the role of class and the way itshould be respected by the regulator, especially at a time when the ship-ping industry is trying to use self-regulation as a means of minimisingthe participation of the unilateral or regional regulator.

“Over the last decade or so, ABS has been one of the more outspokenproponents of the self-regulation mechanism and our message has notchanged over the years. But it is rather disheartening to think we have tokeep repeating it and that the misunderstandings of the self-regulatingprocess are as common today as they been in the recent past,” BillSember told the conference.

“We believe we have a common mission with the regulators and thatby working together, marine safety can only be enhanced. Yet we findourselves in a defensive position subject to a considerable degree of crit-icism and this seems to continue. And why is that? Well, it can besummed up by the wording on the proposed EU draft directive whichsays that the existing system no longer suffices and that it must be


SHIPMANAGEMENT REGULATION

Brussels is so resolute in realising its goal of a single voice for European shipping that it will not

refrain from pushing for Community observer status at the IMO, even if this is against the wishes of

the majority of the EU member states. But to what extent is Brussels in tune with the feelings of the

shipping industry and does it really care what the shipping practitioner thinks?


SHIPMANAGEMENTREGULATION

improved. It doesn’t saycould or should, but saysthat it doesn’t work andmust be improved.

“Apart from the lackof factual background tothis statement, it is puz-

zling considering the close relationship we have with many governmentorganisations around the world,” he added.

Class, he said, is judged by its very occasional failings “but the con-sequences of such an approach can be extreme. The EU, for example,has not accepted petition by class societies that they should be accordedthe same degree of limited liability enjoyed by every other sector of theshipping industry.

“The proposed directive continues to impose unlimited liability onclass for simple negligence. They have argued that recognised organisa-tions, when acting in a statutory capacity for a flag state, should beafforded the same protections as a direct employee of the state. However,this has not been accepted to this point and if you really look at it, it mayonly be a matter of time before such limited liability will have an effectand possibly cause the ruination of one of the major class societies.”

As Deputy Head of Unit at the European Commission’s Directorate

General for Transport and Energy (DGTREN), Michaux has to be clearin what the Commission’s position is in regulating a shipping industrythat is international in nature yet highly complex when it comes to safe-guarding maritime safety and environmental balances in regionalEuropean waters. It was no surprise, therefore, to hear him tell delegatesthat it is “very common practice” for Brussels to be open and transpar-ent in everything it does.

“I don’t know of any other institution which is as open as the EU. Weare legally obliged to allow access to as many documents and contactsas are needed unless they are highly confidential. All stakeholders havealso established relationships with the European institutions. We alsohave the European Court of Justice to ensure everything is conducted ina proper way. We can conclude that we are the most open and transpar-ent institution in the world. It is up to your trade associations to come upwith solid arguments and we are always ready to listen to them.”

But while the EU may be open and transparent, some of its politicalaspirations fall short of those expected of it by Community memberstates. Take observer status at the IMO for instance. While Michaux willargue forcefully for it to happen, organisations like Intertanko as well asthe European Community Shipowners’ Association (ECSA), whose sec-retary general is Alfons Guinier, back the critical stance of some EUmember states to such a move taking place. ➩

“Over the last decade or so, ABS has been one of the more outspokenproponents of the self-regulation mechanism and our message has notchanged over the years. But it is rather disheartening to think we have tokeep repeating it and that the misunderstandings of the self-regulatingprocess are as common today as they been in the recent past”William Sember, President and COO of ABS Europe

“We are not asking for EU membership of the IMO. That has nowbeen put aside,” said Jacques Michaux. “But I am not saying we are notlooking at that for the longer-term because we think it would be a logi-cal consequence considering the increasing legislation that is being gen-erated by the EU and increasing responsibility that the EU now has inmaritime affairs. So it would be a natural development but we under-stand the political questions related to that and we understand it has tobe linked to other UN bodies.

“This being said, we are looking for observer status at the IMO for theCommunity because this would reinforce the visibility of the EU in theIMO. We want observer status on behalf of the community but whowould speak on behalf of the Community at the IMO is an open ques-tion. Should it be the Commission or should it be the Presidency at thetime? This is an open issue,” he said.

Alfons Guinier replied: “In a way it is a problem for EU memberstates because you are talking about competence. I know you are talkingabout observer status for the EU but today the Commission has observ-er status which means the Commission cannot propose anything todayon behalf of member states but can propose issues together with mem-ber states. If the EU has observer status then the EU could propose ini-

tiatives on behalf ofmember states. It is notevident today who wouldspeak on theCommunity’s behalf ormake proposals but againthe main argument is weshould maintain the expertise we have today and that is of the flag statesoperating into the IMO. That is essential.”

Peter Swift, Managing Director of Intertanko, added: “Many industryassociations share the concerns that we do not want IMO to be politi-cised. It is important we allow 27 European member states to come asindividual countries and enjoy open debate, where different views aretaken into account to develop the best convention.

“The problem is if we start having block voting going on at the IMOthen you start getting an agenda that is driven not by best interest but bypolitical interest. You see it already when you attend the IMO, you findblocks of countries starting to oppose almost as a matter of principle. Sothere are real concerns that we may find the processes of the IMO beingextremely distorted by such developments,” he warned.

Listening to Jacques Michaux speak, you can sense a degree of loy-alty: loyalty to the European cause and not necessarily to one industryover another, or indeed the interests of one member state over those of another.

According to David Wood, Partner at the Brussels law firm Gibson,Dunn & Crutcher, ex-antitrust lawyer at the Commission and SMIcolumnist, Commission officials are remarkably homogeneous in thatthey believe in Europe and in liberal economics with essentially minimalstate involvement.

“Part of what the European Commission and the EuropeanCommunity has done is to remove national legislation and replace itwith more minimal Community legislation. So they believe in cuttingred tape and replacing it with more minimal Community legislation.They believe in defending the institutions.

“There is a remarkable degree of commitment to the Commission.When you talk to Commission officials you have to understand that crit-icism must not be generally against Europe, generally against theCommission, or generally against the institutions. One of the biggesttaboos in Brussels is also to be seen to be overtly biased towards yourown country,” he said.

More significant, is the fact that Franco-German policy is at the heartof Europe. It always was and still is and if one wanted to go againstFranco-German policy, then, according to David Wood, the chances ofyou getting your arguments through are slim. “It is still the driving force.It is important to remember that there are important power blocks with-in the community,” he said.

Taking all of this into account, how should the shipping industry inter-act with Brussels and more essentially, what should it do if it finds itselfunder investigation?

According to David Wood, the Commission currently operates ajoined-up policy in that directorate generals work more closely witheach other to achieve their goals. Commission officials attend more trademeetings and are reluctant to offer immunity from prosecution even ifthe antitrust actions of an industry have the support of its government.



“If the EU has observer status then the EU could propose initiatives onbehalf of member states. It is not evident today who would speak on theCommunity’s behalf or make proposals but again the main argument iswe should maintain the expertise we have today and that is of the flag

states operating into the IMO. That is essential”Alfons Guinier, Secretary General, European Community Shipowners’ Association (ECSA)

"We are currently debating with the European Counciland Parliament that the third Maritime Safety Packageshould be treated as a package. The EuropeanParliament agrees but the European Council is stillreluctant about certain elements of that package. Butwe hope that by the end of this year, five of the sevenproposals will be more or less adopted"

Jacques Michaux, Deputy Head of unit at the European Commission's DGTREN

“If you are the first one to go to the Commission and say, ‘Sorry, Ihave been doing something terribly wrong but we will tell you all aboutit’, then you can get immunity from prosecution. But to do that you haveto cooperate wholly, by giving all information about your colleagues. Incases like these, there is a tendency to exaggerate how much the otherguy has been doing and how little you have been doing so incentiveshave been added into the mix to deal with this.”

A lesson for the future? “You have to communicate with the Commission on more than onelevel. There is no more special treatment for the maritime sector and thatis clear,” said David Wood.

Jonathan Benner, Partner at the Washington law firm TroutmanSanders, agreed that while the mechanisms may be different, many ofthe regulatory issues facing the shipping industry are the same on bothsides of the Atlantic.

“The US element of the equation is not because the US is the centreof the world or world trade; it is just that it is a significant part of themaritime structure. Even as the US has receded over recent years as amajor flag state, it continues to be a major, if not the major, trade desti-nation in the maritime world.

“Most debate about regulation is complaint-driven, particularly whenit comes to the maritime industry. We feel under appreciated I think. Wefeel that the nature of our operations is not getting through to the rightpeople. Serving as beasts of burden to the world economy, we getwhipped within an inch of our lives and are dissatisfied with the resultswe often get,” he said.

“From a US perspective, maritime politics are intricate given theinternational nature of the industry. Maritime policy is often much moreaffected by trade policy – it is often a subset of trade policy and due toshipping's international nature, the industry is everywhere and yet it isnowhere politically. The maritime sector does not have a strong politicalbase anywhere,” he said.

This lack of a political base has, in some people’s opinion, resulted inan over-regulation of the shipping industry. But how does this level ofregulation affect the practitioner – the owner or the manager – trying tosurvive against an increasingly uneven playing field?

“We operate in a very complex industry,” said Geir Sekkesæter,President of Barber Ship Management.

“It is a special industry, in that it is small and it is closed. The worldis heading towards transparency and a lot of the specialities we have willdisappear. New regulations are happening because we haven’t dealt withthe issues ourselves and so they are being done for us which is not agood thing. We want to be there and jointly make decisions rather thanhave decisions made for us. It is important we have a voice.

“And why is it like that? Because we are so fragmented, there is nosingle voice. You cannot deal with any one organisation. If you look at

the statistics, 10% of theworld’s fleet is managedby third party managersand 30% of those shipsare managed by 10 shipmanagers. So it isextremely fragmented.The time when we can

have one vessel manager who solves all an owner’s problems has gone.There is no vessel manager around today who can pretend to knoweverything. The traditional hierarchical management organisation willhave problems in the future in dealing with all the new requirements anddynamics we see coming, because this type of organisation is very stat-ic and works well if there are no changes. In an environment where thereare a lot of changes, on focus and direction, you need a more dynamicorganisation,” he said.

Ole Stene, Managing Director of Aboitiz Jebsens and President ofInterManager, one such industry body which claims to represent theviews of in-house and third party managers at political and intra-indus-try level, said that while the shipmanagement industry was willing to ➩



"While I believe there is a great deal of regulation, thereis a definite lack in certain areas of enforcement. Ibelieve the IMO flag state audit scheme should bemade mandatory or at the very least should be mademandatory for new flag states coming into the picture.That is because we have seen repeated situations offlag hopping by vessels that were either rejected fromexisting flag states or have moved from other unsatis-factory flags with poor detention records.

"Another area in need of regulation is the auditing ofrecognised organisations. At present each flag state issupposed to audit its own recognised organisations.This is impractical because if all 166 flag states alldescended on Lloyd's Register I think we could proba-bly occupy them for a full year. That won't work and wehave recommended that the IMO should audit recog-nised organisations in the same way it audits trainingschools under STCW."

Angelo Mouzouropoulos

Director General, International Merchant Marine Registry of Belize

“A third party manager must be a trusted full service provider – able toprovide a cradle to grave service across a range of disciplines. From man-aging newbuilding projects to managing crews, the range of disciplinesthat a good ship manager can provide is huge”Ole Stene, Managing Director of Aboitiz Jebsens and President of InterManager

put its house in order, the time had come for the regulators and politi-cians to start treating shipping as the forward thinking, innovative andprofessional industry it is and listen to what it has to say. “They may bepleasantly surprised.”

He added: “A third party manager must be a trusted full serviceprovider – able to provide a cradle to grave service across a range of dis-ciplines. From managing newbuilding projects to managing crews, therange of disciplines that a good ship manager can provide is huge.”

While the ship managers believe interaction with the regulator is theway forward, how do the owners feel about the threat of over-regula-tion? Harry Vafias, President and CEO of StealthGas, is of the opinionthat seemingly everyone has a view on how the shipping industry con-ducts its business. “By this I do not only mean the international regula-tors such as the IMO, but the smallest fisherman whose harvest in theJapanese Sea may be affected by vessels passing his fishing grounds.

“Everybody has a view and many have outlets to persons whose mis-guidings can push through rules, regulations or requirements that havenot been fully thought through. If we look at the legislation that has beenimposed on the industry in the last three decades we can see how ourworld is changing.”

While SOLAS, STCW and MARPOL have been continually amend-ed over the years, many could be forgiven for thinking that things wouldsettle down, but according to Harry Vafias, that was not the case. ISMcame along, then ISPS, Marpol Annex VI and then a whole raft of issues

including criminalisa-tion of seafarers, classrequirements and alsoissues such as TMSAand charterer vettings.

David Sterrett.Chairman of theAustralian Shipowners’

Association and adviserto ASP ShipManagement, added anostalgic aspect to thedebate by claiming thatin the bad old days it wasnormal practice not to disclose problems onboard ship but wait untilclass or flag state discovered them. “Surely today we have moved on toa world where the ship manager manages in a proactive manner to vol-untary quality standards such as ISO and in recent years to mandatoryIMO standards including the ISM Code.

“To my mind the ship manager and the regulator are sitting on thesame side of the table: we should have common interests, such as sensi-ble, workable, relevant rules and regulations that add value to the oper-ation of the ships and provide for cost-effective, safe working. In otherwords we need to be in step with the regulator and, as in step infers, theregulator should be in step with the ship manager,” he said.

He continued: “The way in which good regulation occurs is when theregulator and the industry are in harmony about what is needed and theyare able to inform and convince the legislators what is needed and howit should be presented. A certain recipe for bad regulation is when thepoliticians decide that they know better than the industry.

“Why do the politicians not listen? Increasingly it is because in spiteof some good regulation, incidents occur that defy logic. This isbecause there is a significant underbelly in our industry that still thinksin the old-fashioned way, or as the title of a paper presented at anindustry conference in Melbourne a few years ago said: ‘The econom-ic benefits of non-compliance’ or ‘how to undercut the competition byignoring the rules’.

“In recent times with the best markets we have seen for a long timewe still have a significant number of owners who operate in that way,buying business for their ships by under-quoting and then seeking torestore the margin by squeezing the running costs,” he added.

“However it is not only the fault of the underbelly, those fringedwellers, in our industry. Ship owners as a genre are a competitivebunch, particularly those who have money, that’s how they got themoney, by being competitive. They usually invest wisely, they under-stand the need to preserve asset values and depending on the extent towhich they are users of ships or investors in ships, they move in and outof the markets during the working life of the asset,” he said.

Sterrett was clear in his message that responsible operators must workwith their regulators. They must be in step with their regulators to ensurethat any rules are workable so as to maximise the positive effects of therules and to minimise the unintended negative side-effects. Even if thesenegative side-effects are packed full of sting. ■



“Most debate about regulation is complaint-driven, particularly when itcomes to the maritime industry. We feel under appreciated I think. Wefeel that the nature of our operations is not getting through to the right

people. Serving as beasts of burden to the world economy, we getwhipped within an inch of our lives and are dissatisfied with the results

we often get”Johnathan Benner, Partner at Washington law firm, Troutman Sanders

“The way in which good regulation occurs is when the regulator and the industry are in harmony about what is needed and they are able toinform and convince the legislators what is needed and how it should be presented”David Sterret, Chairman, Australian Shipowners’ Association

Harry VafiasPresident and CEO, StealthGas

“The question is not if they get paid fairly or not, it is purely a matterof results. I think if the results are good and the owners are happy andcosts are falling then they should get a bonus and be paid well. If theyare not performing well and there are problems of off-hire or bad debts,then I believe they should not be paid.”

Mariella Bottiglieri Managing Director, Giuseppe Bottiglieri di Navigazione

“We only employ ship man-agers when it comes to ourcrew but I am not entirelysatisfied. I am talking aboutwhen our vessels are vettinginspected. Each oil compa-ny has its own policy so if Ido not have a crew memberon my ship that has beenwith me for the period oftime they are specifyingthen I fail the vettinginspection and do not getthe voyage. So who do Iblame? I have to blame myship manager because it is him who is providing the crew. And while Iunderstand it is difficult finding the crew, if I go to a manager I expecthim to solve the problem for me.”

Gerald Carter President, Canada Steamship Lines

“Geir Sekkesæter said this morning that the better managers do theirjobs the less they get paid. I dispute that because the better you do ajob the more efficient you become. It is more difficult to correct anerror than it is to do it right first time. But are managers paid enough?We came to the conclusion last year that there should be a basic ship-management fee and that managers should be paid extra for their per-formance. If managers perform well, then owners will be paid moremoney and if we are paid more money then we should be prepared toshare it with the manager. They are the guys getting up at 3am to lookafter the ship. We were the first domestic Canadian shipping compa-ny to outsource shipmanagement, but it was something we had to doand it made us a much better and stronger shipmanagement company.It allowed us to focus on growing the business and to allow V.Shipsto handle the technical management of our ships and deal with theregulatory issues. Working with ship managers is about relationships. I regard them as a division of my company. We speak to them whenwe draw up our strategic plans because they have an input into these plans.”

Guy MorelGeneral Secretary, InterManager

“I want to respond to Mariella. Ifshe is giving the job of findingher crew to the ship managerthen he has to find the crew. Thefirst thing Mariella has to under-stand is that if owners are askingmanagers to find their crew forthem it is because it is difficultfor them to do it themselves.”

Mariella Bottiglieri “I said I am aware of this. But if I am outsourcing and paying a fee forthe service, then I want something back.”

Guy Morel“The problem is that a number of my members have said that today theyspend a lot of their time just refusing to provide services to ownersbecause they simply do not have the crews. They are doing as well asthey can and if they are unable to provide exactly the service demand-ed it is because they are trying to improve.”

Ole SteneManaging Director Aboitiz Jebsens and President, InterManager

“If I can talk as a manager, this comment from Canada Steamship Linesis very important. In the old days of ISMA we were recognised as anorganisation for recognised ship managers. Also people started to out-source all the crewing and technical management responsibility. So inthis new world we have to build this relationship between owners andmanagers so we can be part of their organisation. We say to our clients:‘Consider us as your extended personnel department when it comes tocrewing’. The only way we can supply competent crews is to under-stand each client's business, the trades they are in and types of shipsthey operate. I think this performance bonus system is good because ifan owner earns more money because of less off-hire why shouldn’t themanager receive a premium because of that.”



FAIR PAY?Do third party managers get paid fairly for the job they do?

If today's ship owners think their lives are over-regulated, they should spare a thought for theirunfortunate colleagues in Italy who still have toabide by local rules that quite frankly shouldhave been consigned to the file marked B.I.N.decades ago.

Take the law number 1045 regulating hygieneand living conditions onboard ship for instance.According to Mariella Bottiglieri, ManagingDirector of Italian owner Giuseppe Bottiglieri,not only does it stipulate that every 'room avail-able for crew, including corridors', must have asufficient number of 'spittoons' available but italso warns that it is an offence if seafarers do notwear a cork helmet to protect against sunburnwhen in tropical areas. And when temperatures

drop at night, an abdominalwool cover is also deemedcompulsory.

For those vessels trading inareas where there is mosquitoinfestation, metallic nets mustbe used to prevent diseasessuch as malaria and yellowfever.

Other regulations concern-ing passenger vessel claim that a doctor presentonboard ship must "have faced different med-ical problems, from work related injuries toassisting in giving birth". Laws used to regulateand control the role of the doctor onboard shipwere drawn up in 1895 and they still apply

today, Mariella said. When it comes to more

modern regulations, the termsare still as confusing. A lawdrawn up in 1998 stipulatesthere must be at least sixItalians onboard an Italian-flagged ship. In such caseswhere six such able men can'tbe found, there is a waiver

approved by Italian trade unions, which allowsEU crews to be used if evidence can be shown ofthe lack of Italian nationals. The peculiar thingabout this, said Mariella, is that this was sup-posed to be a waiver but it has been used sooften that it has become normal practise.

AdHocAdHoc


BUSINESS OF SHIPPING AD HOC

Trot-on, trot-offItalian shipping group Siba Ships has suc-cessfully carried out the largest ever cattleshipment from Australia to South East Asia.Its livestock carrier Deneb Prima loadedover Aus$11.5 million worth of cattle fromTownsville, Queensland, bound for Jakarta,Pandjang and Pasir Gudan in Indonesia andMalaysia. The cargo consisted of 20,060cattle and 2,564 sheep and goats.

Siba Ships sister company Wellard RuralExports, organised 28 road trains inQueensland to bring the cattle to the ship,and they were loaded and transported underthe highest standards of care and supervi-sion. There has only ever been one largershipment of cattle in the world, which was100 more than this, on the same ship fromFremantle to the Middle East in 2002.

Either spit it out or wrap up well

Japan and Korea may be in for a totally trop-ical taste of their own medicine after theCaribbean island of Trinidad revealed itsreadiness to enter the shipbuilding trade.

Whether Trinidad will be able to rival theworld’s largest shipbuilding centres is notclear, but with well established ship repairdocks on the island, a move into shipbuild-ing should be seriously easy going.

It would be the Caribbean’s first foray intothe shipbuilding field and could help improvethe region’s strong links with the sea.

Trinidad Finance Minister ChristineSahadeo said the establishment of a ship-building industry would assist in creatingspecial skills, employment and ensure theislands maritime industries remained sustainable.

Shipbuilding gets a Carribean flavour


BUSINESS OF SHIPPINGAD HOC

Fredriksen FC?Battle for predominance among themajor players in the oil, energy andtanker markets could be in for more of apublic airing – on the premiership foot-ball terraces to be precise – if rumourscirculating the football club websitesprove to be true.

Norwegian tanker billionaire andFrontline supremo John Fredriksen, isunderstood to be one of those interestedin buying Tottenham Hotspur, aPremiership club which could easily beup for sale if the price is right.

Fredriksen would join Chelsea ownerand energy billionaire RomanAbramovich on the ever-growing list ofvery high profile, and very rich,Premiership football club owners.

Both men crossed swords before whenFredriksen spectacularly turned downAbramovich's reputed £140million offer

for his Old Rectory house near StamfordBridge. Abramovich was said to be "des-perate" to acquire The Old Rectory, adesirable mega-mansion complete withits own ballroom close to his footballheartland. But the Blues benefactor'sbreathtaking bid was rebuffed byFredriksen, apparently much toAbramovich's chagrin.

The Old Rectory was sold toFredriksen in 2001 for £40m by its previ-ous owner Mrs Gianna Angelopoulos, theGreek diva who masterminded theAthens Olympics. She and her steel-magnate husband Theodore had bought itfor a rumoured £20m in 1995.

A free eight minute film on the internet isenough to get any teenager excited. Praisethen to the International Chamber of Shippingwhich has produced a video to get pulse rac-ing – about the maritime industry.

International Shipping: Life Blood of WorldTrade is designed to increase public aware-ness of shipping, specifically targeting young-sters and non-expert policy makers.

By presenting shipping as a safe, clean andwell regulated operation the film hopes tomake the industry more visible and attractive

to new recruits. The film should also proveuseful for newcomers to shipping companies

by providing them with a succinct and visualintroduction to the industry.

A high quality DVD, with French, Spanish,Arabic, Chinese and Japanese languageoptions, can be obtained free of charge fromthe ICS.

In the spirit of sharing, and obviously to access a wider audience, the ICS is encouraging shipping companies from around the world to include a link towww.marisec.org/film on their corporate websites.

Publish and be damned!The shipmanagement grapevine has been on over-time following Barber boss Geir Sekkesæter's deci-sion to go public over allegations of illicit practicesamong elements of the third party shipmanagementsector with some players welcoming the open debatewhile others suggesting he would better serve histime "going back to his desk and getting on with thejob of running his business".

The first the industry knew about these revela-tions was when Sekkesæter was quoted in the week-ly Norwegian shipping newspaper TradeWindsslamming 'rogues' in the industry. However, whilethe rest of the shipmanagement sector was left todeal with the inevitable media onslaught his com-ments created, the Barber boss was reported to berelaxing, like the rest of Norway, away from his deskon a well-earned holiday.

Free video sets pulses racing

BUSINESS OF SHIPPING AD HOC

Ole Chr. SchroederDirector of Environmental ComplianceOMI Corporation

"Sometimes you don’t get the feeling that theregulators are on your side when you see thetype of legislation they are introducing. Takethe OWS issue with the new legislation andthe technology isn't there to support the legis-lation. It just creates more headaches. Youhave to solve it in a different way. We havetried to push as much as we can through theIMO on the new suggested regimes on wastefree management to try and find somethingthat works because if it works the unilateralregulator will follow."

Managers put to the testBlood, sweat and tears. Exam timecan guarantee them all. But nowship operators can have theirrevenge on colleagues and job appli-cants following the launch of thefirst International Ship ManagerTest, if you are not in the hot seatyourself of course.

Launched by the Piraeus-basedAbility & Knowledge MetricationOrganisation, the test can be used toscreen job applicants, check theknowledge of existing staff andresolve internal promotion to execu-tive positions.

Saving recruiters from wadingthrough hundreds of CVs may bethe number one use, but the makers have suggested it could also be used by ship owners to sortthe wheat from the chaff when selecting a third party manager.

Three versions of the test are available, ranging from “Standard” to “Executive”, in which the candidate must answer 100 multiple-choice questions covering 12 different “levels of competence”.

The Greek experts have invested 18 months in creating a test which shows how good a shipmanager is. If you think you are up to the challenge then good luck. If not, break out the Pro Plusand head for a darkened corner of the library.

ThoughtProvoking

Littoral states bordering the CaspianSea are preparing to confrontincreased security risks posed byIran’s nuclear ambitions by stop-ping and detaining vessels suspect-ed of transporting weapons of mass

destruction. Ships’ Captains engaged in trade with Iran

can expect substantially intensified securitysurveillance at many major ports and duringtheir voyages across the high seas following arare confluence of interests between the US andRussia, and their allies. They are determined toprevent Iran from acquiring nuclear war-fight-ing capability by almost any means short offull-scale war.

This policy could precipitate a shipping andoil supply crisis of global proportions, focusedon the Straits of Hormuz. A search and arrestof ships on terrorism charges may take placeanywhere and is especially likely in theCaspian Sea, the Persian Gulf and theMediterranean along the principal shippinglanes serving Iran. Many believe that Iran isperilously approaching the point of no return inits development of nuclear war-fighting capa-bility and in the deployment of proscribed tech-nology smuggled in onboard cargo vessels.

The threat of weapons of mass destruction(WMD) falling into the hands of rogue statesand stateless terrorists has concentrated theminds of the major shipping powers as well asIran’s neighbours. Russia has joined Britain,the US and most other members of the NorthAtlantic Treaty Organization (NATO) in takingpowers under their Proliferation SecurityInitiative (PSI) to interdict ships suspected ofunauthorised trade in WMD technology. TheUS has just launched its related global SecureFreight Initiative (FSI), an advanced port secu-rity scheme building on existing collaborative

measures to scan containers bound for Americafor nuclear and radiological materials.

Originally proposed by Russia, theInternational Convention for the Suppressionof Acts of Nuclear Terrorism entered into forcein July this year. This is the thirteenth UnitedNations instrument to outlaw terrorism. One ofthem is the Convention for the Suppression ofUnlawful Acts Against the Safety of MaritimeNavigation, as amended under the authority ofthe UN’s International Maritime Organisation.It bans civilian vessels from being employed in

the transport or launch of illicit WMDs. For thefirst time ever, this law makes it a criminaloffence to exploit any non-military vessel ormaritime facility, including oil platforms andrelated installations, in operations involvingWMDs. The protocols cover “any equipment,materials or software or related technology thatsignificantly contributes to the design, manu-facture or delivery” of such weapons.

Iran’s success in manufacturing weapons-grade uranium on an industrial scale hasdragged the rest of the Middle East into a racefor nuclear reactor construction, ostensibly forelectric power generation. Russia, which has

nearly completed the construction of Iran’sBushehr nuclear power plant, proposes to sup-ply reactor fuel to all the projected plants of theregion.

A guaranteed supply of reactor fuel coupledwith the supervised recovery of spent fuel byRussia would be carried out under the authori-ty of the UN International Atomic EnergyAgency (IAEA). The multilateral controlmechanism is proposed to ensure that spentfuel is not diverted for military use. Egypt,Saudi Arabia and Turkey, Iran’s main regional

rivals, have accepted that condition. But Iraninsists on enriching its own reactor fuel. Indeedit has flouted repeated demands issued by theUN Security Council to freeze its acceleratinguranium enrichment programme, backed by theimposition of economic and moral sanctions.And it has called for the physical destruction ofIsrael, which lies well within its missile range.

Russia, hitherto Iran’s main protector at theSecurity Council, has now suspended an agree-ment for the supply of reactor fuel for theBushehr plant. Iran has responded by invitingtenders for the construction of two largernuclear power reactors, to be fuelled presum-ably from indigenous sources.

Sergei Ivanov, the first deputy prime minis-ter in Moscow, recently declared: “As acivilised nation, Russia is opposed to the acqui-sition of nuclear weapons by Iran.” Ivanovstands a good chance of winning the top job in


DISPATCHESDISPATCHESS H I P P I N G B U S I N E S S R E P O R T S F R O M A R O U N D T H E W O R L D

Nuclear FalloutShipping is targeted as UN fights Iran’s WMD threatThomas Land reports from the International Atomic Energy Agency in Vienna

US

Gov

ernm

ent P

ree

Offi

ce

“Iran has the right tobenefit from (peaceful)nuclear power. But mili-tary nuclear programmesare a different matter”

Sergei Ivanov, First Deputy Prime Minister, Russia

the Russian presidential election, which is dueto start in December. As he put it: “Iran has theright to benefit from (peaceful) nuclear power.But military nuclear programmes are a differ-ent matter.”

Russia has already asked its Caspian Seapartners in the Commonwealth of IndependentStates (CIS), an organisation grouping mostrepublics once joined under the defunct SovietUnion, to form a security alliance to preventmaritime WMD smuggling.

All the countries bordering on the enclosedCaspian Sea are CIS members – except Iran.They support the PSI accords. One of them isKazakhstan, home to 15% of the global urani-um reserves. It has just signed a collaborationagreement with Russia to develop its depositsfor the projected peaceful reactor fuel businessserving the Middle East markets. Kazakhstanand its Caspian neighbour Turkmenistan,belong to a group of Central Asian countrieswhich has declared itself a nuclear weapon-freezone, outlawing the deployment or transport ofsuch devices in sea and land areas under theirjurisdiction.

The American-led PSI programme waslaunched in 2003 in response to the embar-rassment caused by the high-profile arrest of

the So San, a vessel bound for Yemen in theArabian Sea with a cargo of advanced NorthKorean Scud missiles. The ship was intercept-ed by the Spanish navy at an Americanrequest. But it had to be released becauseboth North Korea and Yemen claimed its mis-sion was legitimate under the UN law of thesea convention, which protects the right of‘innocent’ passage along the high seas andnational waterways.

The PSI accords had now found a way to getaround that provision. States within the PSIalliance allow each other to interdict vesselssailing under their flags or through their territo-rial waters, which are under their undisputednational sovereignty. And all registered mer-chant vessels participating in internationaltrade are involved in this arrangement sincethey must fly the flag of one nation-state oranother. All the large shipping countries arepart of the PSI group. Some 80 countries sup-port the initiative. Boarding arrangements aremade under bilateral accords.

Panama, the world’s leading open registry,signed a boarding arrangement with the US inMay 2004. The second largest is Liberia, signingup in February 2004. Other flag states recentlyjoining the PSI accords include Belize, ➩


DISPATCHESNUCLEAR SHIPMENTS

IAEA

Dig

ital G

lobe

“So far, we’ve seen onlythe tip of the iceberg. Wecan now discern a verysophisticated and com-plex underground net-work of black market

operators not that muchdifferent from other

organised crime cartels”

Iranian Nuclear facilityat Bushehr on theArabian Gulf

Mohamed El Baradei, Director General of the Vienna-based IAEA

Croatia, Cyprus and the Marshall Islands. Turkey recently hosted a PSI training exercise

mounted by the navies of France, Portugal,Turkey and the US. More than 30 countriesincluding Israel and several Arab states sentobservers to watch as a fleet of warships sur-rounded and ‘seized’a merchant vessel. The drillin interdicting illicit weapons shipments was justone of many sharp warnings to Tehran. Anothertraining exercise, held in the Persian Gulf lastautumn, involved naval, air and ground forcesfrom Australia, Bahrain, Britain, France andItaly.

Skeptical observers describe the PSI as anexcellent, though incomplete, approach topolicing a cumbersome global non-prolifera-tion regime. The PSI is particularly useful forstopping large, observable shipments, such asboatloads of centrifuges used for enriching

weapons-grade uranium, say scholars JosephCirinbcione and Joshua Williams of the author-itative US Carnegie Endowment forInternational Peace. “But it does little to catchsmall but deadly transfers, like a suitcase ofplutonium,” they added.

The US authorities have acknowledged stag-ing some 25 interdictions in the high seas dur-ing the year ended in April 2006. These arebelieved to have yielded several still undis-closed scoops, including the seizure of dual-usetechnology intended for Iran’s heavy-waterplant and its nuclear-capable missile develop-ment programme.

Probably the greatest success of the PSI pro-gramme so far has been the seizure of cen-trifuge components onboard a ship bound forLibya, which was arrested in Italian waters. Ithas also led to the exposure of a global smug-

gling network largely relying on shipping fortrade in WMD technology, embracing Iran,Pakistan and North Korea.

Mohamed El Baradei, director general of theVienna-based IAEA in charge of the subse-quent investigations, commented: “So far,we’ve seen only the tip of the iceberg... We cannow discern a very sophisticated and complexunderground network of black market opera-tors not that much different from other organ-ised crime cartels. We are investigating the keypieces of a complex picture, with assistancefrom a number of countries. It is essential thatwe make progress in our combined effortagainst illicit trafficking. We must upgrade ourcollective security to prevent sensitive nuclearmaterials and technology from falling into thewrong hands.”

He stressed that middlemen are involved inthis largely seaborne trade engaged in highlylucrative operations in the United ArabEmirates as well as Germany, The Netherlands,Japan, Malaysia, South Africa and elsewhere.Funds generated by the proscribed WMD busi-ness have been recovered from accounts inDubai and other Persian Gulf cities.

Libya has admitted to have invested well

over $40m in its aborted WMD venture. Iran isunderstood to have invested some tens of mil-lions of dollars in WMD technology. Iran’smain maritime smuggling route passes throughthe Straits of Hormuz, observes Richard Bond,programme associate of the British AmericanSecurity Information Council (BASIC). Heargues that “to prevent Iran’s future access tosensitive nuclear and missile components andequipment from the sea, it would be vital forparticipating states in the PSI to conduct inten-sive naval patrols in the Arabian Sea, Gulf ofOman and Persian Gulf to interdict any move-ments of suspicious cargo”.

Maritime interdiction against Iran would berelatively straightforward to implement, theBASIC position paper suggests, as Westernnaval forces have been patrolling the areaextensively in recent years.


DISPATCHES NUCLEAR SHIPMENTS

The

Amer

ican

Iran

ian

Cou

ncil

Iranian President, Mahmoud Ahmadinejad

But this would inconvenience merchantshipping. And shipping and energy economistsfear that Iran might also respond by disruptingmaritime commerce through the straits, one ofthe world’s critical shipping chokepoints.Chokepoints like the Straits of Hormuz are crit-ically important to the world oil trade becauseof the sheer volume of the stuff passing throughthem. They are susceptible to military actionand terrorist attacks as well as shipping acci-dents. They would make attractive targets forenemies of the West because any disruption ofshipborne traffic at such points could be cata-strophic to the global economy.

Iran has already asserted its preparedness tostop the flow of oil across the Straits ofHormuz by force. It has demonstrated its deter-mination by staging several military exercisesthere. But even such retaliation would onlydelay its development of a nuclear weaponscapacity.

A related line of defence against shipbornetransport of proscribed nuclear materials andtechnology has been mounted by the newAmerican SFI programme to screen containersat their ports of embarkation. The scheme issupported by an extensive coalition of oceancarriers, shippers and terminal operators. Itbuilds on the experience and collaborativecounter-terror arrangements established for theearlier US Megaports, Container Security andCustoms Trade Partnership Initiatives involv-ing some 50 ports. These are the points of ori-gin for more than 80% of the cargo shipped tothe US.

The initial phase of the SFI programmelaunched this year involves the deployment of

dockside nuclear and X-ray screening technol-ogy in Southampton as well as Singapore, PortQasim in Pakistan, Puerto Cortes in Honduras,Port Salalah in Oman and the GammanTerminal at Port Busan in Korea. These portswere chosen to determine the impact of large-scale international scanning technology on bigcargo volumes involving shipments and trans-shipments. The scheme introduces instantinformation sharing between the local portauthorities, the US customs staff serving thereand their headquarters in the US, eventuallyleading to the creation of a secure global datanetwork on seaborne trade.

Detecting the presence of highly enricheduranium concealed in containers is a difficulttask. The natural radiation emissions of harm-less materials like potassium and granite cancause false positive readings. Despite theautomation of high-tech radiation sensors anddata processing, recourse to manual cargoclearing will remain necessary from time totime. “Improving port security worldwidehelps to improve our security at home,” said

Michael Chertoff, the homeland security secre-tary in Washington.

A specialist at his department explained:“Our ultimate vision is to create a globally net-worked array of detection equipment that willbe configured to enable real-time streaming ofcontainer images and radiological detectiondata to other countries engaged in maritimetrade. This government-to-government datasharing will mitigate the risk factor in globalfreight movement.

“Our plan is to deploy next-generation toolsand integrated systems, along with otherproven technologies, to scan maritime contain-er cargo. Our purpose is to prevent terroristsfrom using nuclear and other radiological mate-rials to attack the global maritime supply chainor launch such an attack on the US.”

The new UN convention for the suppressionof nuclear terrorism prescribes a globalapproach to deterring WMD smuggling on thehigh seas. It describes nuclear terror as “one ofthe most serious threats of our time”. The con-vention has grown out of the summit confer-ences of the richest industrial nations, the so-called G8. At a meeting in Kananaskis, Canada,five years ago, these countries made a $20bncommitment to fund a collective counter-pro-liferation programme. The global initiativeagainst terror was declared jointly by the presi-dents of Russia and the US during the G8 sum-mit in St. Petersburg in July 2006. And at theirlast summit in June 2007, held atHeiligendamm, Germany, the G8 leaders con-demned terrorism in “the strongest terms” andurged all countries to support the resulting con-vention.

Apart from the G8, the original founders ofthe initiative were Australia, China,Kazakhstan, Morocco and Turkey. The con-vention is concerned equally with rogue statesoperating illicit nuclear weapons programmesand ostensibly independent terror groups tryingto smuggle primitive radiological weapons intomajor population centres perhaps in a ship-borne container. Security analysts in severalcountries now expect an attack delivered bymeans of such a radiation dispersal weapon –comprising a conventional bomb mixed withradioactive material – against big civilian tar-gets as a matter of time. It would cause poten-tially devastating disruption and paralysis.

Matthew Bunn, a senior researcher atHarvard University’s Project on Managing theAtom, believes that transporting radioactivematerials for such a purpose remains relativelyeasy. The reason: “These things are small,” hesaid. “They are not as radioactive as peoplethink they are. And they are quite difficult todetect at a distance.” ■

Thomas Land is an author and foreign correspondent

who writes on global affairs.


DISPATCHESNUCLEAR SHIPMENTS

Michael Chertoff, US Homeland Security Secretary

“Our purpose is to prevent terrorists fromusing nuclear and otherradiological materials to

attack the global maritime supply chain

or launch such an attack on the US”

USC

G

Aweek they say is a long time inpolitics but if the intrigue andcounter-intrigue that gripped theshipmanagement industry at theend of June and early July is any-thing to go by, you could be

excused for thinking a clear policy of tit-for-tathad replaced the normally genteel and relative-ly private world of third party crew and techni-cal management.

First of all you had Barber President GeirSekkesæter complain to the press about theprevalence of illicit trade practices by the seed-ier end of the third party shipmanagement sec-tor. Then you had trade associationInterManager call for a rethink on managementfees as it sought to defend the need for neces-sary reward for the quality work today’s bonefide ship managers perform.

We then heard that major player Anglo-Eastern Ship Management had sold over aquarter of its stock to its main shipowning part-ner CMB. Then to top it all, it was announcedthat Bernhard Schulte had abandoned its long-held stance of inter-company competition andautonomy in favour of a ‘big is beautiful’ poli-cy by merging Eurasia, Hanseatic, DorchesterAtlantic Marine and VBSK into one shipman-agement unit that will control a fleet of over500 ships and employ in excess of 14,000 crew.

A busy time indeed. But this shift in debateonto whether size really matters in a manager’sability to manage effectively answers certainquestions raised through the public discussionsover alleged back-handers and illicit dealingsagainst those ship managers who feel they canonly win ship owner business if they chargelower fees but earn their crust from the savingsthey should pass onto the owner. Are qualityowners in favour of only dealing with the upperechélon of managers, along the lines of anIACS scenario?

“The biggest problem we have is that theshipmanagement industry is so fragmented,”said Geir Sekkesæter. “Since some of our indus-

try has a bad reputation, this can impact badly onother issues like recruiting seafarers. They don’twant to work with people with a bad reputation.For me to take Barber to the next level, theindustry needs a good reputation.”

According to Sekkesæter, the good guysshould be seen as the good guys and theiractions should be recognised as such.

He added: “I would like an IACS kind oforganisation that is seen as good and workingwithin certain rules and regulations. If we wantto take this industry to that level we have to doit together, I also think some of the crewingissues cannot be done by a single manager orowner and I see all of these things as beinginterlinked.

“The biggest problem we have in the industryis if you put the three biggest class societiestogether. You have 60-70% of the market. If youput the three biggest managers together, youhave 20% of the third party management marketwhich is only 10% of the total world fleet.

“What I want to achieve is for owners tounderstand that to focus on the management feealone is maybe not in the owner’s best interest.If we take a higher management fee, we canemploy more resources to do a better job,which means the operational cost of the vesselis lower than in the opposite case,” he stressed.

But not everyone shares this view of an eliteorganisation of managers. ➩


DISPATCHESCONSOLIDATION

Tit-for-tat is a gameworth winningIn the dog-eat-dog world of third party shipmanagement, the major players are jockeyingfor position in an environment where only the biggest or the best will survive. But howmuch of a game of survival is it and will allegations of illicit practices among the less competitive players force an eventual two-tier shipmanagement sector? SMI investigates.

“I would like an IACSkind of organisation thatis seen as good andworking within certainrules and regulations. Ifwe want to take thisindustry to that level wehave to do it together”

“No, this is completely wrong, this is not theright approach,” said Roberto Giogi, Presidentof the world’s largest third party manager,V.Ships.

“You can have a small shop providing fan-tastic service. The mark that defines you is ifyou are a good operator or not. Your KPI etc.will tell you apart but to have a cartel for ship-managers is not good. Best practice is the wayahead,” he stressed.

According to Roberto Giorgi, employingbest practice can be met by even the smallestmanager, which is why he believesInterManager has taken up this initiative. “Itshould be utilised by anyone in the manage-ment business who wants to improve theiroperation. Its not a question of saying I don’twant to give my secrets to my competitorbecause it is the most effective implementer ofthe best practice that is what makes the differ-ence,” he stressed.

Whatever the outcome, one feeling sharedby the majority of third part management play-ers is that the days of the ‘shonky’ ship manag-er are numbered. “In some respects this isbecause of the crew shortage in the industry.Crew can be more selective to who they workfor. Why should a crew member work forsomeone who underpays when he can work for

someone who is reputable and pays on time,”said Nigel Cleave, Chief Executive Officer ofEpic Ship Management.

Peter Cremers, Chief Executive of Anglo-Eastern Ship Management, agrees that shipowners are starting to look more closely atthose shipmanagement concerns that can offerstrength in depth.

“Yes of course. It’s also a big world andeveryone can have their own piece of air. I guessthat owners will come to people like us whohave the big organisations, a global presence and

large resources. Owners will slowly movetowards this area. But I am not saying I want tokick everyone else out,” he said.

Examination of the Bernhard Schulte moveshows it is based around a drive to exploit groupsynergies and offer a better service to ship own-ers. The company said in a statement that themerging of the four units would allow it to makecost savings on shared systems, take a globalapproach to sourcing crews and end competitionfor clients between group companies. Moreimportantly, it said it was a response to industrydevelopments “which require substantial invest-ments in personnel, training, information tech-nology and quality assurance resources”.

Roberto Giorgi, himself an advocate of the‘big is beautiful’ philosophy, said: “The idea tohave one single company makes a lot of sense,unless you have a completely different productor brand in the four companies.

“So people know what the key competencyis, it is better to have one unit managing thebusiness and then maximise the synergies thatexist in the organisation. The challenge theywill face is people, whether they will align,technical, accounting, systems, purchasing etc.So it will be very challenging for them but it isthe right idea,” he said.

“This is a business that is very competitiveso everyone will try to grow through organicgrowth, joint venture or acquired growth. Thereare companies that could add value to you ifyou bought them, ie. by allowing you to enternew markets. There are a lot of guys who aretrying to copy what we are doing.”

Peter Cremers lent his support: “For years Iknew that Schulte tried to say it had five com-peting companies with different names. Butnow big is beautiful and they have changedtheir stance. I have always said that Anglo-Eastern was different in as much as we were aglobal group with central control. They are fol-lowing us, at the end of the day, as all theoffices and systems are the same and everyonereports to one office.”

Kishore Rajvanshy, Managing Director,Fleet Management in Hong Kong, said thatgiven the state of the shipmanagement sector,he has always maintained that consolidation


DISPATCHES CONSOLIDATION

“I don’t suppose the sizeof companies will makea difference as far as theimage of shipmanage-ment is concerned. Thephilosophy of the com-pany is more importantthan the size”

“You can have a smallshop providing fantasticservice. The mark that

defines you is if you area good operator or not.Your KPI etc will tell

you apart but to have acartel for shipmanagersis not good. Best prac-tice is the way ahead”

Roberto Giorgi, President, V.Ships

in the industry is the most likely scenario.“This is because the economies of scale are ofgreat importance and the smaller players willhave difficulty in operating because of a lackof access to crew and resources such as shore-based support systems. Consolidationin the shipmanagement industry is somethingthat doesn’t surprise me at all, to be honest,”he said.

But with growth comes targets and these bigcompanies are under pressure to meet targetsand, some suggest, are trying to to force small-er players out of the market.

“I don’t think they can do it. People can goto the other extreme and become a 600 or 700

ship company. Then you lose the focus on theservice to the customer. What then starts to hap-pen is they head back to where they started bysaying they have got individual centres fromwhere they are going to operate and they aregoing to have a smaller number of ships man-aged from each centre and each centre is a stand-alone unit which can provide the customer withfocused service,” said Mr Rajvanshy.

“You have to strike a balance somewhere.You can become too big very easily and youcan lose focus on the customer satisfaction. Atthe same time, economies play a lead role inensuring that you have sufficient resources atyour disposal in order to develop support sys-tems and new procedures,” he added.

But will this consolidation help to improvethe image of shipmanagement as an industry?

He struck a conciliatory note: “I don’t sup-pose the size of companies will make a differ-ence as far as the image of shipmanagement isconcerned. The philosophy of the company ismore important than the size. You can be verybig but have a low standard of maintenance, forexample. The size does not give any comfort toanybody that the service will necessarily begood.” ■


DISPATCHESCONSOLIDATION

“Because of the crewshortage in the industry,

crew can be more selective to who they

work for. Why should acrew member work for

someone who underpayswhen he can work for

someone who is reputableand pays on time”

Nigel Cleave, Chief Executive Officer, Epic Ship Management

"I think we should be working closely with-in Europe to form one maritime educationand training package so we can bring peoplein from different countries and feed theminto the same programme. At the moment,every country has got its own nationally-approved certification route which conflictswith other nations.

“If we have European bodies like EMSA,then we should have an international marine

education package that complies with inter-national standards. That might knock on afew doors, unfortunately, and a lot of nation-al associations might not necessarily like theidea. However, from a training and a shipowners’ point of view, it would guaranteethe same standard of training within Europe.And, dare I say it, you could go aboveSTCW 95 so that you have an STCW Plustype of package.”

StrivingForPerfectionCaptain John Clarence

Head of the National Maritime College of Ireland

What are the main obstacles in attracting young Europeans to sea?

Reading is one of my favourite hobbies. I try to read books about dif-ferent cultures because I am curious about the history and the lifestylein these places. I don’t read business books, absolutely not.

My last book was written by a Jewish writer, Frank McCourt,called Angela’s Ashes. It speaks about the life of Jewish people trav-elled from Ireland to the US in themiddle of the 1900s.

I am just completing an old book,which is very well known, calledShogun (James Clavell), which isthe history of an English Captaingoing to Japan in the 16th Centuryand speaking about the life in Japan.It is a very long book and I am veryhappy I am completing it. It is inter-esting but 900 pages is too much.

I must admit that this culturalreading might be helping me in mydaily business. But my main pur-pose in reading is to help me reachmy soul and relax, both on business trips and holidays. I am a lover ofsailing and I have a lot of time to read and relax when I am onboardmy boat.

Of course, I have also read some books which are relevant to myhome country of Italy. I recently read a book relevant to my native city,Naples, which speaks about the problem of corruption and criminalityin the Neapolitan Mafia. It has a very large ‘business activity’ and it isinteresting for a Neapolitan like me to know a bit more about it.

The name of the book is Gomorra (a reference to the ancient cityoverrun with corruption). It speaks about the terrible expansion of theunderwater economies which thrive on drugs and smuggling. It is likea cancer that is taking over the city I love.

It is strange to see how these criminal organisations have a systemwhich is very close to the one used by global corporations, which is ter-rible. Sometimes the criminals could even teach management. Theyhave a huge level of delegation, autonomy and management by objec-tive. It is terrible, but it is also true. ■

WHAT I’M READINGBy Ugo SalernoChief Executive Officer, Rina

TANKER: The History and

Development of Crude

Oil Tankers

Author: Raymond SollyPublisher: Chatham PublishingPrice: $49.95

Delighting the enthusiastic maritime child in all of us, Solly’s illustratedoffering tells the tale of these ocean-going giants from the last days of sail until thearrival of the modern monsters.

Colour and black and white illustrations and photos accompany each stage of thetanker’s story, making it an ideal addition to a vicarious shipping library.

But don’t be fooled by the pretty pictures alone. Solly is not afraid to broachmore thorny issues. He is quick to point out how environmental pressures and eco-nomic pressures have played a leading role in the tanker’s metamorphosis.

The descriptions of oil handling and processing may be a little Janet and Johnfor industry experts, but it could make a great present for a future Captain who islearning the ropes. ■

Little Green Book of Getting Your Way: How to Speak, Write, Present, Persuade, Influence,

and Sell Your Point of View to Others

Author

Jeffrey GitomerPublisher

FT PressPrice: $13.59

If 42 is the meaning of life then 9.5 is how to get your own way, at least according toGitomer.

In his latest, and some say his best, work he explores the 9.5 elements which willsee you persuade all and sundry that your way is the only way. Whether in person, onthe telephone or on the page he argues that you only fail when you decide to quite.

This is not a telesales pep-talk but a true business aid. Thorough in detail, but easyto empathise with, Gitomer’s in your face style shakes your brain into understanding.Its definitely work a look, unless you get your own way already, of course. ■

Getting the Goods: Ports, Labor,

and the Logistics Revolution

Author

Edna Bonacich & Jake WilsonPublisher

Cornell University PressPrice: $23.95

Centering their efforts around the US import hubsof Los Angeles and Long Beach Bonacich andWilson examine the impact the logistics revolutionhas had on transport workers.

Particularly concerned with the flow of containers from Asian factories to theUS, the book talks to workers at each stage of the supply chain and learns how theirworking conditions have deteriorated over recent years.

Its admission that these changes have also brought opportunity and power to thelabour market is interesting. However, it is the authors’ willingness to defy the status quo when it comes to globalisation and containerisation that is more thoughtprovoking. A must have for all students of political economics. ■



BUSINESS OF SHIPPINGLAW

One of the issues causing heated debate at lastmonth’s Euro-Summit on a revised Treatywas competition. The draft Constitution upfor re-negotiation contained the objective

that ‘The Union shall offer its citizens an area of free-dom, security and justice without internal frontiers,and an internal market where competition is free andundistorted.’

Without prior warning, the German delegation atthe Euro-Summit tabled a revised draft of the Treatyfrom which the words ‘where competition is free andundistorted’ had mysteriously disappeared! This wasundoubtedly the result of a prior agreement betweenthe French and German governments to seek to downplay the role ofcompetition in the EU and to reduce the influence of the Commissionin applying the competition rules.

The amendment passed despite the grave concerns of theCommission and leading politicians such as the UK’s new PrimeMinister, Gordon Brown. It was certainly a significant political defeatfor the Commission.

The immediate cause of the change can be discerned from a keyspeech given by Nicolas Sarkozy in June 2006, setting out his a politi-

cal manifesto for his Presidential campaign. He madea number of key declarations concerning Europeancompetition policy which, in the abstract, were high-ly alarming. They received little scrutiny outsideFrance.

Sarkozy argued that, although the general principles of competitionunderpin the European Single market, we should not:• abandon European companies to the mercy of ‘predators’ from

elsewhere• punish the abuse of a dominant position on the basis of legal

presumptions rather than legal proof (as in the US)• reject the idea of ‘Community Preference’ and prevent industrial

policy – although the rest of the world does the opposite.This seems to be a rejection of the Commission’s article of faith that

the ability to compete on world markets depends on maintaining com-petitive home markets. In other words, the enforcement of the compe-tition rules at home ensures that our companies are leaner, fitter andmore dynamic – and therefore better able to take on competitors fromother parts of the world which may be shielded from some of thosecompetitive pressures.

It also demonstrates a rejection of the clear demarcation between theGovernments of the EU Member States and the Commission in relationto competition policy. When the two most powerful Members of theEU jointly express their dissatisfaction with one of the principal poli-cies of the EU (and the one where the Commission has most independ-ence) in such a public way, you can sense the rules of the game arechanging.

Companies operating in Europe probably value certainty aboveeverything else in terms of the regulatory and legal environment. Riskmanagement is only possible where there is a clear set of rules.

This Franco-German intervention has muddied the rules, at least forthe time being. However, to reject the legitimacy of their concerns willonly serve to ensure that the rules will remain muddied, that there willbe regular conflict between the Commission and some of the MemberStates and that companies will face unpredictability.

There needs to be a public debate on how to accommodate MrSarkozy’s vision – which is emphatically European, rather than nation-alist – within the existing set of rules. This will cause friction with theEU trading partners and there will be winners and losers but politicalpragmatism needs to exist with a clear legal order. ■

David Wood is a partner in the international law firm of Gibson Dunn & Crutcher

LLP, which has offices in the US, UK, France, Germany and Belgium.


A Volte-Face onCompetition?By David Wood

Risk management is only possiblewhere there is a clear set of rules.This Franco-German interventionhas muddied the rules, at least forthe time being

Companies operating in Europe probably valuecertainty above everything else in terms of the regulatory and legal environment


LIVE OBJECTS OF DESIRE

Objects of desirePicture perfectProjectors often give a picture akin to Pete Doherty’sSaturday morning. Thankfully, Epson boffins havemade one which won’t give you a headache or guar-antee an authentic front row of the cinema experi-ence. The latest LCD technology, married with a 2.1xzoom lens, throws a 100-inch picture from around 10feet away, meaning you can watch it from the same

room in comfort.However, with a price tagof over two grand you’llneed Doherty depth ofpocket to appreciate it.

Fun-packed laptopTapping away on a computer is a sure-fire way tolook busy. Hey, it even beats carrying folders aroundthe office for mock enthusiasm. Little do your col-leagues know you are blasting zombies or watchingtelly and not formatting a spreadsheet. Claiming tobe the most powerful media laptop on the market,the Area 51 m9750 is a beast of a machine. It boastsa killer 500GB of storage space (across two hard

drives) and two NVIDIA graphics cards for optimum performance. And you can be sure to “hit your targets” thanks toits 17-inch screen. Throw a built in webcam and DVD recorder into the mix and you need never tuck a folder underyour arm again. Alienware Area 51 laptop £2,099.00 www.alienware.com

Epson EMP-TW1000 projector£2,500.00

www.epson.co.uk

In the dockPrepare to empty your pockets and sex-up your desktop. Thisnew generation docking station will bring music to your earsand draw envious glances from afar. The TerraTec NOXON 2will store all the tracks you throw at it and boasts a nifty wireless connection which allows you to pull tunes straightonto your hard-drive. Like a rocking teenager it also has anindependent streak, allowing it to work away from your PC.And if all the technology sounds a little scary, you can always

search through the 9,000radio stations for a littleretro FM.

You’re windingme upOh, the irony.Modern technolo-gy kept alive bymedieval engi-neering. Plug yourspaceage mobileinto this little stun-ner and you’ll getthe juice back intoit in no time. Athree minute windgives eight minutes of talk time, with more elbowgrease bringing greater success. It’s compatiblewith Nokia, Ericsson, Siemens and Motarola Starhandsets and will fit into your pocket with ease.

TerraTec’s NOXON 2 docking station£150.00

www.my-noxon.com

Wind-up multi mobile charger£5.99

www.iwantoneofthose.com


LIVEOBJECTS OF DESIRE

Play boy phoneEven Hugh Hefner would castan enviable glance at you forhaving this beauty at the end ofyour arm. The fetching VertuAscent model is made of leatherand scratch-resistant sapphirecrystal, making it practicallyindestructible. It also boasts acool concierge button whichgives you a personal assistantat your fingertips. The wow fac-tor is there to see, but theAscent won’t come cheap oreasy. As with all Vertu modelsyou will have to look furtherthan Carphone Warehouse toget your piece of the action.

AnchormanNowday’s you don’t need to be Ron Bergundy to getyour spot on primetime. But if your mum is the onlyone to read your blog, Behringer is here to help you.Its new podcast kit has a studio-grade USB interface,microphone and headset, allowing you to share yourwit and wisdom with the world, every day. It comeswith a complicated mass of acronyms and cables,but claims to be suitable for those 14 and over. Sograb some chicken, dive into the manual and prepareto live the life of an anchorman.

Vertu Ascent mobile£2,200.00

www.vertu.com

Behringer USB podcast kit£89.95

www.behringer.com

Beam me upSkin-tight jumpsuits and silly ears made “Trekky” fashiona big no-no. Thankfully, the new EzVision Video specshave changed all that. Weighing in at 68g, these space-age shades double as your very own 50-inch cinemascreen, complete with nifty retractable headphones (builtinto the spec’s arms) to bring you high quality sound.Compatible with iPod Video or other portable video/DVDplayers, it will allow you to cling on to an alternative reali-ty on planes, trains and automobiles – providing you’renot driving, of course.

TimeoutBringing you the coolest selection of clocks sinceSalvador Dali, Lifetimer gives you a creative countdownto the most important dates in your diary. If you needto know how long you must wait for your tea break,birthday, meeting or day off, simply press the relevantbutton and you will know to the nearest nanosecond.Delighting romantics and control-freaks alike, Lifetimerhas a calender extending until 2050 and can issue

scrolling messages acrossits LCD screen. Whether

it wastes more timethan it saves is up

to you.

EzVision Video eyewear £149.95 www.mobilefun.co.uk

Lifetimer£14.95

www.iwantoneofthose.com

People are speculating when the shipping markets will col-lapse. With that in mind do you see a difference in theresilience of traditional owners and the new public entities? There’s no question that publicly funded companies are more vulnera-ble than traditional firms. A shipping company has a certain flow ofmoney going in and out. The question is what they do with the moneywhich remains. If they’re obliged to distribute dividends, or pay thebond holders, in principle, they’re giving out money they could’veretained for a rainy day.

The other thing, of course, is when the freight market is lessfavourable and you release your quarterly results which mirror thatsituation, people who have been following that share price see thedownward trend. What will they do? Defensive thinking will tell themto sell in order to protect the value of their portfolio, thereby exacer-bating the situation. In that way your own policy is dictated by twolargely unpredictable markets, the freight market and the capital mar-ket. With so many players involved, you can’t possibly know whereyou are going and what’s going to happen.

The entire opposite is the case with a private company. If they want todistribute earnings, they will. If they don’t they will keep the moneyinside the company. Companies can decide how much to give, and thelegislation of shipping allows people to keep untaxed balances. So cer-tainly, smaller companies aren’t necessarily lower cost, but they’re moresecure as they aren’t open to the additional uncertainty of players in themoney market.

Do you have any advice for companies wishing to become more stable and protect themselves from marketfluctuations? That’s a million dollar question. I could suggest alternative investment inother fields to spread the risk. However, I’m not entirely sure that’s fea-sible. Shipping is a full time job. There’s no place to hide when yourincome is falling and you’re an audited company submitting quarterlyresults to the financial authorities.

For the past 20 years the EU international commercial policy has fol-lowed what people call liberalisation. The lowering of tariffs and tradebarriers has opened the door to external competitors who were previous-ly not playing in the domestic markets of Europe and the United States.Everybody’s aware now of the growth of low cost producers in the FarEast. Traders and manufacturers are aware that they are engaged in anundeclared commercial war which will have winners and losers. Amongthe undisputed beneficiaries of globalisation is shipping of all kindswhich has seen the demand for ton miles explode. I don’t want to makepredictions, but I’m concerned about the ability of traditional manufac-turing countries to face up to this change in their trading environment.

Let me explain myself. When you have a huge cost advantage, whichexists now in the Far East, it acts as a magnet to investors. That entailshuge long term risks for the high-cost economies. If entrepreneurs investelsewhere, because it’s deemed to be cheaper, there’s an initial period inwhich domestic consumers will buy the cheaper products and you have again as you can buy more for less money. In the long-term, however, thereare implications on national income and employment in the areas whichare vacated. You’re progressively making the buyers poorer, there’refewer jobs and less income available. What you’re doing is transferring ameans of generating income abroad, while hoping the momentum creat-ed by the better off will continue and there will be benefit for all.Experience in Western Europe has shown that the unemployment gener-ated by hasty governmental dealings of “sunset industries” – coal, steel,car manufacturing, shipyards , and the like – has not been absorbed by thetertiary sector for a quarter of a century.

ONMYMIND


SHIPMANAGEMENT ON MY MIND

“I’m concerned about what life is going to belike here in a high cost region as a result ofcompetition from abroad on one hand, combined with a situation where you have along term shortage of investment on the other”

Dr Alkis J. CorresChairman of the Hellenic Association ofMaritime Economists, Director ISMTServices, Ability & Knowledge MetricationOrganisation and Director Newbuildings,Naftotrade Shipping & Commercial SA.

“Do you have any advice for companies wishing to become more stable and protect themselves from market fluctuations?”

“That’s a million dollar question. I could suggest alternative investment in other fields to spread therisk. However, I’m not entirely sure that’s feasible. Shipping is a full time job. There’s no place tohide when your income is falling and you’re an audited company submitting quarterly results to thefinancial authorities”aQ

I’m concerned about what life is going to be like here in a high costregion as a result of competition from abroad on one hand, combinedwith a situation where you have a long term shortage of investment on theother. We should not forget also that low cost economies are doing equal-ly well in the service sector. I wish to pose a question here: Which is theeconomic space envisaged for Europe? You have to produce or sell some-thing in order to be able to consume

Do you think Greek companies will follow Norway’s lead andmove away from the traditional, hands-on family makeup? The Greeks are a long way away from becoming as corporate as theNorwegians. Greeks have made steps in this direction. There are largecompanies that are very similar to the Norwegian and Danes. Buteven in these corporate Greek companies the presence of the owner ispre-eminent. The Greek families have a protective longer term viewin which the family protect the children, who are seen as the future ofthe company. So, the emergence of impersonal corporate structures isculturally difficult.

Much more important is which parts of the company you keep foryourself and which ones you hive off. That’s interesting, because, intheory, the smaller you are, the more you should outsource. There’sbeen a lot of progress in this field. There’s a cluster of supporting pro-fessions around. Probably the most important resource on my desk ismy telephone list. If I want a safety specialist or a naval architect it’sin there. I am networked into the cluster: we live from the cluster andthe cluster lives from us.

The existence of the cluster is of immense importance. The small-er you are the more important it is, because you rely on your contacts.And it has other advantages. For example, if you’re not happy with aparticular lawyer, accountant or crew provider, all you have to do ishave a look at your contact list. It’s not the same when you have people in house working for you.

How supportive is the Greek Government of the shippingindustry? In the past the Greek Government has provided subsidies for the con-version of deep sea ships into coastal ferries for example. That was ahugely successful programme. But it had to come to an end afterGreece entered into the common market, because the EU has got apreconceived hostility against ship building subsidies. It’s this attitudeagainst shipbuilding subsidies, together with high salaries and socialsecurity contributions which has actually killed the shipbuildingindustry in Europe. Finally after years of wrangling the EU has doneit – the dog’s dead now and everyone can feel comfortable at home.We’ve been cutting subsidies in a higher cost sector here while the

Koreans and the Japanese were actively subsidising their own compa-nies. We’ve to stop and ponder where we’re heading and who we’regoing to team up with.

It has been suggested that Greece could soon lose its statusas the largest shipowning country in the world. Is this some-thing you see happening and are you concerned about thepossible consequences? China is a typical example of what happens when capitalism takes theform of a state enterprise. I don’t know how long it’s going to last, andI don’t know how long it will remain as effective. If priority is givenby the Chinese in this direction there’s very little we, or anybody else,can do about it. Of course, we take great pride in being considered thelargest maritime nation in terms of ship ownership. This doesn’t meanwe’ve any kind of monopoly. It’s a free market where people cancome in and out when they wish.

If, however, in a few years time there is an enormous expansion ofChinese shipping, that is not going to be without consequences. I’ll giveyou an example. The Jones Act in the US protects coastline shippingfrom outside services. I often wonder why that law has existed for somany years without change despite the huge cost to charterers and theState? As you know, under the Jones Act, ships have to be built in theUS, fly the US flag and be manned 100% by US citizens. In returnthey’re given exclusivity around the US. On top of this cargo reserva-tion regime they’re given an operating subsidy. A ship built in the UScosts three to four times as much as a ship built in North Korea.

I think considerations such as security of supply play an importantpart in this. If we assume access to domestic transportation were freefor all, in the case of a war, foreign vessels serving the US coast wererepossessed by the countries whose flag they fly; what happens then?Companies can’t sell their products. Many regional depots willremain without gasoline and oil. People will freeze in the winter athome and they would not be able to use their cars as there isn’tenough gas. The well thinking American institutions have not allowedthis to happen. The US keeps its ports open to all traffic coming fromabroad. But when it comes to this domestic traffic it doesn’t play anygames. It’s got to know that there’s a fleet under its own control. It canactually count the number of ships and guarantee the security of sup-ply, which is very important.

This kind of consideration may become more evident in case wesee one huge commercial fleet dominating the world market. The fearof what’s going to happen if one huge fleet starts to dominate the sup-ply of ships and services is going to create counter forces where hugeregions of the planet won’t stay at the mercy of market players.

How important is it for Greece to be seen as number one? We’re very proud of our current status, but I don’t think it’s important tobe number one. Greece is number one in the EU, but what would happenif Greece was second in the EU? Would we have company failures? No.Would we have people being laid off? No. People in Greece are verypleased and proud to be where they are. But I don’t think there’ll be manybleeding noses if we were second of third. It is much more important thatwe continue to provide first class services. ■


SHIPMANAGEMENTON MY MIND

“China is a typical example of what happenswhen capitalism takes the form of a stateenterprise. I don’t know how long it’s goingto last, and I don’t know how long it willremain as effective”

Political endorsement of European coastal and shortsea shippinghas been much in evidence in recent years, spurred on by thepotential environmental and economic benefits of reducing pres-sure on the congested highway system. However, actual finan-

cial input by the EU and member states to promote the sector and itsusage, and foster a modal shift, remains minuscule by comparison to themulti-faceted investments currently being made by the shipping commu-nity itself, sometimes on the basis of medium or long-term commitmentsby industrial producers and shippers.

Shaped by market demand and by evolving customer requirements,today’s broad-fronted development of the fleet engaged in intra-regionaltrade includes versatile new multipurpose vessels designed for demand-ing coasting work, compact feederships, innovative tankers for the dis-tributive traffic into small ports and terminals, diminutive carriers of freshproduce and fish, and ro-ro vessels geared to industrial ‘system’-typetransportation and inter-factory logistics.

The Dutch presence and endeavour in the tough business of managing,operating, building and equipping the smaller classes of ship whichunderpin the shortsea bulk and industrial cargo trades is undiminished. Ithas, in fact, gained added dimension through judicious shipbuilding sub-contracting as well as investments in domestic production, and throughthe expansion abroad of shipowning and shipyard firms.

A microcosm of Dutch activity is provided by the modern Bijlsma yardat Lemmer, under the auspices of owning group VeKa, a specialist ininland shipping. Recourse is made to Groningen-based ConoshipInternational for designs while VeKa subcontracts hull construction tooverseas yards, including a group-controlled facility in the CzechRepublic. Completion and outfitting is undertaken at Lemmer, with itsfully-covered shipbuilding dock of 138m by 18m.

At the time of writing, Bijlsma’s orderbook comprised of more than 25seagoing newbuilds, including 18 of a Conoship-developed design ofaround 3,200dwt, for operation within the extensive fleet managed fromDelfzijl by Wagenborg Shipping. The type embodies a single hold with-in main hull dimensions of nearly 89m length overall by 11.8m breadth,and distinguished by a high cubic capacity, well-suited to forestry prod-ucts and other goods.

A Conoship-originated multipurpose cargo vessel design of 4,450dwthas provided the technical foundation for Indian shipbuilder Chowgule &Company’s drive for business in the European shortsea sector. The ensu-ing succession of contracts will provide an injection of 20 newbuilds intothe European shortsea bulk traffic.

Initial orders were secured from Apollo Shipping of Germany and theNavigia Group of The Netherlands for three such vessels apiece, where-by the German company will be responsible for the freight managementof all six ships and Navigia will provide the technical husbandry of theseries. UK shortsea specialist Union Transport subsequently awardedChowgule a deal embracing a further six similar ships. Apollo andNavigia converted options held on an additional six of the type into firmcontracts and other northwest European interests booked two more exam-ples of the versatile trader. Besides keen prices, early delivery positionshave proved a powerful motivator for placing construction in India. Thefirst deliveries are due in 2007.

European companies behind the 20-ship production run have previous-ly built at Conoship member yards in The Netherlands, and Chowgule’sGoa establishment has Conoship ‘associated shipyard’ status. The chosendesign is marginally under 90m overall, with a breadth of 14.4m, andembodies a single, box-like hold offering a capacity of around 205,000cuft, incorporating movable bulkheads. A compact MaK main engine hasbeen specified in each case, yielding a power output of some 2,000kW, toensure a fully laden speed of about 13 knots.

Another company which has joined the fold as an associated shipyardof Conoship, the Tunisian firm Mednaval, has bought the Navol yard inRomania. Activities there will be revived through Mednaval’s exportorderbook comprising four 3,300cu m LPG carriers and six 2,600dwtmultipurpose, river-sea cargo vessels. The latter deal involves Germanshortsea interests and a design developed in conjunction with Conoship.Mednaval’s plans to create a new shipbuilding facility at Bizerta, Tunisia,have been postponed for the time being.

A combination of Dutch and German know-how has resulted in acompetitive new class of feedership and an opening contract for twosuch vessels of 1,036teu. The pact between Groningen technical consul-tancy Vuyk Engineering and Bremerhaven shipbuilder SSW SchichauSeebeck has yielded the SSW Super 1000 eco-type, otherwise known inthe Dutch company’s portfolio as the VC Feeder 1000 design. A keyfeature of the new breed is its capability to take a very high proportionof loaded containers, to the extent of 75% on the basis of a 14 tonnehomogeneous load factor (HLF).


TRADE ANALYSIS SHORTSEA SHIPPING

Shortsea investmentsacross a broad frontBy David Tinsley

The gearless boxship is also notable in promising a comparatively fastservice speed of at least 18.5 knots. Cell guides are fitted as standard, andthe two newbuilds booked by Haren-on-Ems ship owner Bernd Sibumwill be reinforced to 1A ice class requirements. The SSW Super 1000ecoalso provides for the equivalent of some 250TEU reefer units.

Within the same design family, Vuyk has also drawn up a proposal fora 1,027teu feeder offering adaptability to the 45ft container size. Withinmain dimensions of 147.10m length between perpendiculars, 22.70mbreadth and 11.75m depth, the VC Feeder 1000-EV has been developedfor full payloads based on 45ft units, or a mix of 20ft and 40ft containers.The designer’s specification includes a single, powerful medium-speedengine of 12,040kW, for a trial speed of 19 knots.

Perpetuating the design employed in the 814teu, mould-breaking sis-ters Geeststroom and Geestdijk, the fleet under the operational aegis ofthe Icelandic group Samskip was bolstered last year by four further exam-ples of the class, in the shape of the 803teu Samskip Pioneer, SamskipCourier, Samskip Express and Samskip Explorer.

Encapsulating Damen Shipyards’ CF800 design, Geeststroom was thefirst ship conceived specifically to carry full loads of 45ft pallet-wide

containers, while suited to a range of other sizes. The type can takeapproximately 300 x 45ft boxes, although cargoes are invariably mixed,typically including 20ft tanks and 30ft bulk containers.

The four ships commissioned in 2006 have been chartered by Samskipfrom the German owners Jan Kahrs and Bernd Becker, who each orderedfive sisterships to Geeststroom and Geestdijk from Damen Shipyards,with construction entrusted to Damen Galatz in Romania. The originalpair had been built for another German owner, Jorg Kopping, to criteriaset by Geest, and Damen’s Hoogezand-based design team had tailored theclass to the shortsea business, with its broad mix of units and growingdemand for transportation of 45ft pallet-wide boxes.

The 18-knot, CF800 breed is equipped with fittings for 20ft, 30ft, 40ftand 45ft containers in the box-shaped holds, and for 48ft and 49ft boxeson the hatch covers. Moreover, movable cell guides are incorporated inpart of the holds for 40ft and 45ft containers. The design thereby marriesexceptional versatility with the possibility to load 2.5m pallet-friendlycontainers, as well as standard ISO units of 2.438m, anywhere through-out the cargo section. The 45ft container can move seamlessly betweenthe different transport modes and offers almost identical loading capabil-ities when compared to standard 13.6m road trailers.

Endorsing the role and scope of shortsea transport in serving Europeaninter-factory logistics, Airbus Industrie has backed a newbuild project fortwo special-purpose ro-ro vessels designed to carry aircraft parts and sub-assemblies. Fret-Cetam, the jointly-owned undertaking of Louis DreyfusArmateurs of France and Hoegh Autoliners of Norway, has awarded con-struction of the 3,500dwt ro-ros to Singapore Technologies Marine, onthe basis of long-term employment agreements with Airbus. Deliveriesare expected in 2008. The company already operates the 5,200dwt villede Bordeaux, a larger ship of similar concept, in the Airbus supply chain.

As with the Chinese-built ville de Bordeaux, the two new ships willplay a pivotal role in the manufacturing logistics for the Airbus 380, the555-seat, long-haul aircraft to be produced at the Toulouse plant, usingcomponents supplied from other Airbus factories in Western Europe.Loading points on the vessels’ itinerary will be Hamburg, Mostyn(north Wales), Cadiz, and St Nazaire, with discharge at Pauillac, nearBordeaux, for transhipment and onward transportation to the assemblysite in Toulouse.

ville de Bordeaux is distinguished by flexible cargo carrying arrange-ments which provide the cavernous volume required for the stowage ofelements of the A380, while also enabling deployment in the wider ro-rofreight ship market. At any one time, the ro-ro is able to accommodate upto three sections of fuselage, two wings, one tail plane and one underbodysection. The two further ships will have a reduced draught, as well assmaller capacity, compared to ville de Bordeaux, but will be similarlysuited to both aircraft components and other ro-ro cargo.

A new phase of investment in the system transportation concept has seen the introduction of a series of custom-built, ro-ro equipped ➩


TRADE ANALYSISSHORTSEA SHIPPING

Chairman, Association of Short Sea Operators in Greeceand President of Naftotrade Shipping & Commercial

“The problem is that the EU has allocated very little money for thisand it’s not possible to promote short sea shipping with the limitedfunds available from Brussels. This money is a fraction of what isrequired. In Greece we see the sea as the roads of the future, but weneed the funds to make this dream a reality. “The EU doesn’t like to give subsidies to the transport industry. Ithink that this is the wrong idea. The EU should understand the onlyway to promote short sea shipping is through the provision of finan-cial incentives.“We need to cover the European Commission’s lack of action interms of external costs. These external costs are pollution, noise,accidents and congestion on today’s roads. The EU will not chargethe other transport industries for these external costs as well as thecost of road maintenance. This is tantamount to subsidizing roadtransport. Exactly the same thing the EU wants, publicly, to restrict.What the Commission should do is penalize road transport andmake it pay its own external costs. Then the EU can give us facili-

ties and incentives so that we can at least replace our fleet.”

forestry goods carriers to the year-round Baltic traffic. Purpose-designedfor the special containers used by paper producer Stora Enso, as well asbeing suited to general unitised cargo, the trio of 13,800dwt vessels of theTransPaper class has been built by Aker Yards. Management has beenentrusted to Rederi AB TransAtlantic, which has secured a long-termcharter agreement with Stora Enso for shipments of the exporter’s SECUcontainer units.

The trio’s operating remit is the trade out of the northern Finnish portsof Kemi and Oulu to Gothenburg and Lubeck. Stora Enso has 10 mills inSweden and 15 in Finland, and Gothenburg forms the hub of the group’snew logistical arrangements, the North European Transport SupplySystem (NETSS). TransPaper, TransPulp and TransTimber constitute anintegral element of the Phase 2 development strategy for NETSS.

Construction of the ships to the highest ice class, IA Super, has been aprerequisite of the technical project so as to ensure service dependabilityand efficiency through the challenging winter conditions in the Gulf ofBothnia. In order to guarantee the requisite schedules between the vari-ous ports, even during ice cover, the contractual parties stipulated a twin-engine installation and a relatively high speed. It is understood that 16knots can be maintained using just one engine, offering an economicservice speed where schedules and voyage legs permit.

While optimised for the transport of up to 155 SECU containers oncassettes, the TransPaper design offers an efficient medium for goodshandled by sto-ro means, as well as for rolltrailers, road vehicles andtrade cars. The new-generation ro-ro carriers are designed to be loadedand unloaded on two levels simultaneously, to expedite port turnroundtimes. A wire-operated TTS stern ramp/door provides the cargo bridgebetween the ship’s main deck and the shore terminal, while the upperfreight deck is arranged to permit the landing of a shore-basedlinkspan. ■


TRADE ANALYSISSHORTSEA SHIPPING

Dag Terje AndersenMinister of Trade and Industry, Norway

Q. You have been vocal in your support of shortsea shipping,

however, many feel the NOx Tax is harmful to short sea operators

in Norway and pushes freight away from the sea and back onto

the road?

A. “Modern ships produce a lot less NOx emissions than older ves-sels. We have to think about processes to renew the fleet. If I believethat transport via the sea is an environmentally-friendly alternative totransport on trucks then I must also accept the consequences andmake that transport more environmentally-friendly. Our LNG drivenferries in the fjords are a very good example of the innovation andnew technology to reduce both NOx and CO2 emissions. But, we hadto set some goals to keep this process going.”

Shaped by market demand and byevolving customer requirements,today’s broad-fronted development ofthe fleet engaged in intra-regionaltrade includes versatile new multipurpose vessels designed fordemanding coasting work

No shipping segment faces the same raft of regulations as the tankerindustry but the biggest safety improvements may come from the kindsof things that aren’t so easily measured or documented.

The tanker shipping industry has the world’s attention, and rightly so.Any accident may cause pollution; the risk of explosion and loss of lifeis ever-present; and, more than in any other shipping business, incidentscan put the charterer’s name in the headlines.

Few would argue that our particular niche is the most scrutinised seg-ment of the shipping industry. In that respect, every challenge faced bythe shipping industry, and the shipmanagement industry, applies to aneven greater degree to us. Tanker operators face a dizzying amount ofinspections, documentation, rules and – in the event of an accident –punitive legislation. These safety parameters mean that a regime likeTMSA is only a harbinger of things to come in other ship segments. Butis that the only lesson to take away from the tanker industry?

Compliance, documentation, performance in pre-approval and vettingprocesses, strong quality systems – these are simply required. You can’tdo business without them. At this point, however, the way further to zeroincidents and flawless performance, is through improvements in areas thataren’t perhaps so easy to measure, but are core to safe vessel operations.

What are examples of these improvements that are difficult to meas-ure? Well, every vessel is unique. A completely new vessel leaving theshipyard is not complete. It will need a number of adjustments to makeit operate optimally. It takes specific knowledge to understand whatneeds to be done and how to do it.

In other words, on any one vessel, there may be a range of possibil-ities – all of which ensure compliance – but only one is perfectly appro-priate for that vessel. This kind of knowledge is as critical to safe oper-ations as it is practically impossible to legislate into place.

Another element that can’t easily be defined, reported or measured isthe culture onboard – the relationship between officers and ratings, thestyle of communication and the general attitude towards safety amongcrew members on the vessel. Informal interaction between the officersover a meal, for example, is key to ensuring that seafarers have an over-all awareness of the state of the vessel, and to training new skilled crewmembers. That won’t happen if the master is always in his cabin fillingout check-lists.

This may seem merely a question of numbers, but there are largerissues related to the state of the accommodations, a shortage of seafar-ers, constant pressure on the management fees and a patchwork oflabour laws. We’ve responded to this by establishing easy proceduresand allowing people to think beyond the rules. If you are allowed totake the time and think logically, then you can improve the hardware

and also the procedures.On the safety side,

budgets have jumpedby a factor of ten overthe past ten years. Atanker manager cancount on being inspect-ed by someone practi-cally every month. Atthe same time, as anindustry, the constraintsare getting tighter: newrules, a shortage ofqualified seafarers, lessexperience.

Our industry needs to be careful not to become one populated by pro-fessional tanker regulation compliance companies instead of tankeroperating companies.

There is a much-needed focus on bringing the whole industry up to athreshold for quality performance via rules and regulations. In otherwords, compliance. At ITM, we say 'beyond compliance', because wewant flawless operations, and that means more than just following the rules.■


Compliance alone is not enoughin tanker managementBy Lars Modin, Managing Director of International Tanker Management Holding

10 keys to choosing a third partymanager according to ITM

1. What's your gut feeling? How will the manager manage my asset?

2. Do I feel like I can trust the people working in this organisation?

3. What is this manager's reputation? His history? 4. What kind of references does the manager have? 5. How does the manager take care of personnel both

onshore and onboard? 6. Does this manager know my type of ships? 7. Does the manager deliver value for money? 8. Will the manager run my ships like a ship owner? Has the

manager been a ship owner? 9. Does the manager have all of his certifications in order? 10. Does the manager have experience in my vessels' trade?

The sight of European flags flying high at the top of the ParisMOU White List will not stop the European Commission fromtaking unilateral action and making the Voluntary IMO MemberState Audit Scheme compulsory for all member states.

Philippe Burghelle-Vernet, Head of the European Commission'sMaritime Safety Unit, for one, is unhappy with the overall performanceof EU flags and believes a compulsory audit scheme would put an endto European registries frequenting the Black and Grey Lists.

“It is difficult for us to understand or accept why European Flagscan’t be the best in the world,” Mr Burghelle-Vernet said. “One of theideas we had was to have the Voluntary IMO Member State AuditScheme made compulsory in the EU. The underlying idea is to encour-age member states to improve the quality of their flags.”

The proposal is included in the EU's Third Maritime Safety Packageand is seen as an important element of Europe's drive for zero-toleranceon substandard shipping. The idea has yet to be debated by theEuropean Parliament but Mr Burghelle-Vernet is not fazed by the ideaof a unilateral stance on the issue.

“We propose that this code could be imposed into European legisla-tion as compulsory,” he said. “For the time being several states havebeen audited by the IMO, including the UK and Denmark. Others havenot yet volunteered and we do not want a situation where member statescan avoid being audited.

“We have two countries still on the Grey List and, unfortunately, wehave one country on the Black List, Slovakia. There is no reason whySlovakia, as a member of the European club, shouldn’t conform to thehigh quality standards we are supposed to provide as a European coun-try,” he added.

While he laments Poland and Ireland remaining on the Grey List, MrBurghelle-Vernet points to the success of Cyprus and Malta, which have moved from the Black to the White List since joining the EU


MARKET SECTOR REGISTRIES

Necessityor purely Machievellian?

Europe wants compulsory audits on EU flag states but does this smack ofunilateralism gone too far?

“The IMO has asked nations to submit the

names of auditors but there is still a big defi-

ciency in this area. If you look at the rates at

which audits are being done now, if it became

mandatory today we would still not be able to

accomplish the amount of audits to cover the

amount of member states that have to do it”

FRANKLYSPEAKING

Rear Admiral Peter BradyDirector General of the Maritime Authority of Jamaica

"Unilateralism is a threat to the harmonisation of internation-al rules and regulations. We must come to our senses andrealise that if we do not have a harmonised system, we willcreate differentiated systems in various countries. We aresupposed to be facilitating free and uninterrupted trade butsuch a practice will cause confusion and delays in portsthrough the application of varying standards. This will bringstress on the industry and affect the free movement ofinternational trade."

in 2004. This he sees as vindication of the EU’s stance on the issue. “This good result is due to the implementation of community rules.

But these results need to be consolidated simply in applying what isonly voluntary. In Europe we are the IMO's best ally in enacting a lot ofIMO rules into our legislation and making them compulsory throughoutEurope. It is a significant result for quality shipping in general that morethan a quarter of the world's fleet flies European flags,” he said.

The EU’s resolve on this issue will put increased pressure on the IMOto act. IMO Secretary General, Efthimios Mitropoulos, refused to com-ment, however, Dick Welsh, Director of the Isle of Man Ship Registry,made it clear the Commission’s intervention would not be welcome.

“This initiative has to come from the IMO. We don’t want Europe, or any other states, going off unilaterally to decide who is fitand who is not fit to run an international ship registry,” he said.

“If Europe decided to go unilateral and say it will approve only flagstates that have been audited, would create difficulties for ships lookingto take cargoes into Europe. It undermines the international operation ofthe IMO and we have to try and focus on making the IMO the interna-tional regulator in a global industry. Anything else is just incredibly dif-ficult.”

While he is strongly against unilateral action, Mr Welsh believes amove towards a compulsory audit is a “natural progression”. He said:“It should end up as a White List of registries which can fulfill all therequirements expected of a flag state and exercise jurisdiction in theway it should do. I believe it would, hopefully, level the playing fieldfor port states and for the IMO to determine who is and who is not fitto run a register. It should be a simple ‘fit’ or ‘not fit’ separation. Youwould not get into Grey Lists or Black Lists or have different classes ofregistry. It should be a make or break definition.”

Mr Welsh admits that such a move would have casualties, withrecently introduced flag states suffering most. However, he believes itis a necessary move in creating a level playing field and promotingquality shipping. “There should be nowhere to hide for substandardoperators these days,” he said.

Serghios Serghiou, Director of the Cypriot Department of MerchantShipping, Ministry of Communication and Works, has an equally hard-line on the issue. “Certainly, developing flags will have to be audited.The expectations are that the shipping industry should follow a certainsafety, environmental-protection and labour standards. Any stateswhich cannot control its ships and enforce these standards should not bein business until it complies,” he said.

“If we have this mechanism, the control is continuous. There is nopossibility for somebody to lower the standards. And if a company shiesaway from maintenance it can be identified quickly and put under pres-sure,” Serghios Serghiou added.

Not everybody is in favour of such a ruthless system. “We are notlooking at naming and shaming necessarily, we are looking at holdingpeople up by their boot straps and getting them to recognise their obli-gations under international conventions. It’s a carrot on a stick: theseare your responsibilities, these are the ways you can fulfill these respon-sibilities. The audit scheme is here to help and bring people up toscratch,” said Don Sheetz, Executive Vice-President, Vanuatu MaritimeServices.

Making the results of completed audits available would create peerpressure and help drive standards upwards, Mr Sheetz explained. “If theresults of the audits were made available it will allow others to improve.At the end of the day we are trying to critique, criticise and identify thebad apples. You can’t do that just be penalising people. Can you take ashipping administration out of the IMO? I’m not sure. That’s a bigstep,” he added.

Finding people to voice their support for a compulsory audit schemeis easy. Transferring words into action may, however, prove a little moreproblematic.

“The difficulty is in the timescale and the numbers involved inrolling something like this out. That’s probably where the sticking pointwill be. At which point do we make it mandatory? You can throw yourhat into the ring and say we want it now. But it may be three years downthe line before we get to that stage. There needs to be a realistictimescale,” Mr Welsh said.

The lack of qualified auditors could add to the time pressures. “TheIMO has asked nations to submit the names of auditors but there is stilla big deficiency in this area. If you look at the rates at which audits arebeing done now, if it became mandatory today we would still not beable to accomplish the amount of audits to cover the amount of ➩


MARKET SECTORREGISTRIES

“If the results of the audits were made

available it will allow others to improve. At the

end of the day we are trying to critique,

criticise and identify the bad apples. You can’t

do that just be penalising people. Can you take

a shipping administration out of the IMO? I’m

not sure. That’s a big step”

WhatIThink

Peter CardyChief Executive UK Maritime and Coastguard Agency

"The shipping industry is best regulated at the internationallevel through the IMO, unless there is a clear case for regulating at the European level. My first task in taking overat the MCA is to check that our workforce not only has theskills for the “here and now”, but also has the right mix ofskills for the future as the shipping world around uschanges. Everyone I speak to wants to talk about thefuture and they are geared for change, as long as it isproperly planned and the reasons are fully understood. My job is to get the reasoning and the planning right."

•

•

•

•

•

Voted best in the world The Isle of Man has been top of the Annual Flag State Performance table issued by a round table of organisations comprising ISF; ICS; Intertanko; Intercargo and Bimco for the last three years.

Highly-rated Port State Control Performance The Isle of Man places great emphasis on Port State Control Performance. It is highly rated on all MOU White Lists.

No annual tonnage duesWith no annual dues and low registry fees -The Isle of Man remains an extremely cost-effective register.

Offshore AAA - rated jurisdictionThe Isle of Man has a highly -rated economy, fully supported by a pro-active and stable government.

Favourable tax regime The Isle of Man operates a zero rate company tax and fully supports its thriving shipping community. Incentives and grants are available for new business.

•

•

•

Customer Focused Its registry, survey and support staff provide out of hours cover 24/7 to serve a global industry. They remain focused on customersʼ needs and sensitive to the commercial realities of the industry.

Pragmatic approachIts dedicated survey team provide survey, audit and technical support to the fleet. They are on hand for advice and support 24/7 with a pragmatic and practical approach to regulation.

Centre of Excellence The Isle of Man is more than a Ship Registry. It is home to a thriving shipping industry with the support industries required to register and manage ships and commercial yachts. This centre of excellence provides a proven package for existing and potential clients.

Interested? To find out more, please contact: Isle of Man Ship Registry, Peregrine House, Peel Road, Douglas, Isle of Man, IM1 5EH, BRITISH ISLES

Tel: +44 (0)1624 688500 Fax: +44 (0)1624 688501 www.iomshipregistry.com

From superyachts… to supertankers… A quality flag for the discerning owner or manager

The Isle of Man is pleased to announce the new brand for its Shipping Register:


MARKET SECTORREGISTRIES

member states that have to do it.One has to look at that and put itinto perspective,” reasoned RearAdmiral Peter Brady, DirectorGeneral of the MaritimeAuthority of Jamaica.

And the quarrels with the auditdo not stop there. Audits are cur-rently conducted by a panel ofthree, drawn from different flagstates; a practice which not every-one is comfortable with.Fortunately, much of the competi-tion between ship registries is on amarketing level and expertise ismore openly shared in the techni-cal environment.

“In the marine accident investi-gators international forum there are 50 to 60 countries involved. Many areopen registries and many are traditional registries and we go there to dis-cuss ways of making the seas safer. When we go there we are not afraidto show the statistics. I don’t mind other operations coming in and look-ing around,” Mr Sheetz said.

Not everybody sees the audit, compulsory or otherwise, to be an all-reaching solution to tackling substandard operations. “I think the volun-tary audit scheme is a nice tool. However, it doesn’t solve the problem,”explained Eric Dawicki, President and CEO, Dominica MaritimeRegistry. “The reality is port state control and flag states need to workmuch better together. There are problems when vessels are detained.

You don’t hear from port state con-trol and this violates the SOLASagreement. The critical path tosuccessful shipping is going to bethe elimination of the us-verses-them mentality and we start to takeseriously the fact that open inter-national registries still exist andthey are not the bad guys.

“It is critical, and I mean criti-cal, to have a fair and equal play-ing field for everybody that levelplaying field is ten years away. Itis going to take a dramatic changeat the secretariat level at IMO. Wehave a phobia at the mid-Management level of the secre-tariat. If flag state and port state

control can work together, sub-standard shipping can be eliminatedwithin ten years,” he reasoned. ■

“The reality is port state control and flag statesneed to work much better together. There areproblems when vessels are detained. You don’thear from port state control and this violates theSOLAS agreement. The critical path to successful shipping is going to be the elimination of the us-verses-them mentality”

The most amazing thing about my visit to Charles R. Weber’soffices in downtown Piraeus was that Roman Abramovich’syacht Pelorus was moored right outside the front door. Infact that was how my interviewee told me to recognise his

office: “It’s the white marble building right opposite the Russian foot-ball club owner’s yacht, you can’t miss it,” he said.

Basil G. Mavroleon, remains relatively bemused at the thought of a155 metre, $130 million, mega yacht moored a few yards from his desk,but he seems more proud of the small flotilla of Greek shipping tycoon-owned yachts moored next to the Pelorus, each of which he points outto me together with the name of its owner. Maybe it has something todo with his Greek shipowning heritage and his total unmoving passionfor the shipping industry in general.

Mavroleon’s family traces its roots in the shipping business to the1890s and the Greek island of Kassos, and although the family relocat-ed over the years – first to Syros, then Egypt, then London and the US– Mavroleon clearly cherishes his Greek heritage. He was raised in theUK and the US but maintains dual Greek and US citizenship.

“My family created London Overseas Freighters in 1948 and I wentto sea on ships in the summer,” he said. Starting work as a young manat Mavroleon Brothers Ltd, another family business, helped him learnabout tankers. “I then joined Charles R. Weber in 1970 as a trainee andI am still learning,” he mused.

Questioning Basil Mavroleon further, it becomes clear that he hasalways been excited by the tanker business more than the dry sector,basically because he likes the volatile nature of the market – one day


‘You have to have staying power in shipping,strong nerves and strong reserves’ By Sean Moloney

I first met Basil Mavroleon nearly twodecades ago during a visit stateside andsince then his reputation as a prominentmember of the US east coast shippingcluster has blossomed. Indeed he is oneof those shipping ‘celebrities’ who seemsto pop up at all the best receptions andconferences, immediately filling the roomwith his strong personality

feast, one day famine. “What I liked about the brokerage business wasthat I had a globe in front of me and when I looked at it I could see whateveryone was doing. I could plot Mr Bergesen in Norway fixing hisships on long-term time charter or Mr Onassis in Greece fixing his shipsshort-term. It gave me a broad view of what everyone was doing, some-thing I didn’t get working in a family business where all I got was theone perspective of what my family was doing. Here I saw everybody’sview. It was interesting to see how different owners approached themarket,” he added.

He told me that working for a broker like Charles Weber gave himindependence from his family but showed that he could also be an assetto his family businesses when they needed his tanker broking knowledge.

I first met Basil Mavroleon nearly two decades ago during a visitstateside and since then his reputation as a prominent member of the USeast coast shipping cluster has blossomed. Indeed, he is one of thoseshipping ‘celebrities’ who seems to pop up at all the best receptions andconferences, immediately filling the room with his strong personality.Closely associated with the New York broking and Greek shippingcommunity, he now happily embraces the marine consultant epithet hispeers now prefer to call themselves.

“The broking market has changed dramatically. We have survived allthe stones that have been thrown at us over the years such as the majoreffort to replace the broker electronically which was a massive failure.The difference today is the added value aspect, and it’s true, you haveto know your business. Broking is not just about fixing a ship from Ato B, it’s about being an asset to the ship owner and to the oil company.You need to be able to understand how the business is evolving and youneed to be able to help your client make the right decisions. But ofcourse today we are not brokers we are marine consultants. In a sense,when you get to my age, hopefully you have more to offer, you are abroker but you are also a consultant, helping your clients with allaspects of their business.”

Sitting in his cosy but plush Piraeus offices, with the sun streamingin and lunchtime approaching, it is hard to imagine being anywhere lessidyllic. As Basil admits, the importance that London and New Yorkoccupied in the 1980s and 1990s as centres for the Greek shipping com-munities has now waned and the Greeks are returning in their droves,“not that they really left in the first place,” he smiled.

“Greece is in the European Union; it is a pleasure to live here and tobe able to go back to your roots in a beautiful country that now has thetechnology and the right levels of efficiency necessary to do business.Plus you have fewer tax concerns and shipping is important and promot-ed here as a major industry. So many more major and minor Greeks aredeciding to place their business focus here in Greece. Yes, they can havean office in the Baltic for chartering purposes or a little office in NewYork. But more and more are choosing not to. The trend is changing.”

Just over a year ago Compass Maritime Services and Charles RWeber teamed up to set up WeberCompass (Hellas) in Piraeus, whereBasil says the aim is to expand from two to at least four brokers on thetanker side. Mavroleon now plans to spend at least one week a monthin Piraeus working with his colleague Bobby Mitropoulos.

According to Basil Mavroleon, the family shipowning tradition that

has dominated Greek shipping for so long is still going strong despitethe strengthening presence of the younger publicly-facing Greek shipowners who are actively courting the stock markets for public money tofund their growing fleets.

“While many companies may have withdrawn from shipping in the1980s and 1990s to focus on the financial markets and other investmentopportunities, they have returned to shipping with a vengeance. The num-ber of ship owners here in Greece is staggering, but it is a very fragment-ed market with many companies owning one, two or three ships each. Butthey have a very independent spirit and they are people who want to dothings their way and that is fantastic. It’s in their blood,” he said.

But their predominance nowadays boils down to their astute businessacumen, he contends. According to Basil, for whatever reason, the Greekowning community had the guts to reinvest in the business after the 1990swhen shipping was a 5% business – huge risks with no returns.

“Yet many new names and many old names invested heavily in thelate 1990s and early 2000s and it paid off because they were first in andthe ships were cheap. In retrospect, it was not obvious at the time but itmade perfect sense. Never was money cheaper and never were shipscheaper. Their move into the newbuilding sector was very well timed,especially if you consider the fact that the markets are always cyclicaland the ageing overbuilt fleet of the 1970s needed replacing.”

As he explained, in 1977 there were around 450 VLCCs in the worldas well as an additional 100 ULCCs. “Now there are only 460 VLCCsand no ULCCs apart from the four that survived – the Papachristidisships that are with the TI pool. At that time we were consuming 58mbarrels of oil a day. Now we are consuming 85m barrels. We were sooversupplied in those days that ships had no choice but to go into lay-up. Then when there was demand they would start trading again and killthe market. So for 20 years nothing happened. Today in tankers you canchange the balance easily and change the market very quickly. We arenot over-tonnaged at the moment but the likelihood is that supply willbecome an issue,” he warned.

Tonnage oversupply remains the one major concern on Basil’s mind,along with the ability to man the ships competently and effectively. ➩


BUSINESS VIEWPOINTGETTING PERSONAL

“Broking is not just about fixing a ship from Ato B, it’s about being an asset to the ship

owner and to the oil company. You need to beable to understand how the business is

evolving and you need to be able to help yourclient make the right decisions”

Title

Tel FaxCountry

First Name

Business email

Cardholder’s Name

Credit Card Number

Cardholder’s Signature

Expiry Date CVC2 Security code

Job Title

Address

ZIP/Postcode

Surname/Family Name

Yes I would like to subscribe to Ship Management International

Annual subscription £85

Credit Card

Cheque (Payable to Elaborate Communications Ltd)

Invoice me/ my company (payment terms 30 days)

Two year subscription £160

Your details

Payment options

Don’t miss your next copy of

/

/last 3 digits on the signature strip

Signature

Date / /

Please copy, complete and fax back to:

+44 (0)1296 682156Or post to: Elaborate Communications Ltd, 10 Acorn Farm Business Centre, Cublington Road, Wing, Leighton Buzzard, Bedfordshire LU7 0LB, United Kingdom

SUBSCRIBE TODAY!

/ / /

“I see 2009 as being a problemyear for tankers in terms of supply:but the dry industry is creating ahuge expense for itself with all theseforward charters at big rates and thatis a little bit worrying. If there is acrack in the dam, will people contin-ue to pay $50K per day for Capes forfive years? I don’t think so. Somenames are good but that doesn’t mat-ter as they will all renegotiate. Sodepending on what you paid for yourship, this will put pressure on peo-ple. Right now it is all smooth sail-ing, it just gets a little scary unless ofcourse this is the paradigm shift thateveryone talks about where theindustry is regularly paid the price itdeserves for the services it providesinstead of the market being feast or famine.

“It’s remarkable what is happen-ing in dry and if you look at the fun-damentals it will continue. But thenagain, we are ordering a tremendous amount of newbuildings and thatwill tell the tale in 2010, ‘11 and ‘12,” he opined.

But is the problem more acute for the younger companies which haveused the US stock markets to raise their capital?

“Yes, because they have to have a strategy where they are constant-ly growing and bringing new ships into the fleet. That does put pressureon public companies to transact which has caused the second handprices of ships to be ridiculously high. You have a lot of interest outthere and people almost have to buy ships. In this office alone we havea list of people as long as your arm who want to buy ships, but whereare the ships? There are ships out there but they are very expensive and half the time you reach the owner’s sale price, they change theirminds because they didn’t realise they would get it in the first place,”he explained.

A cursory glance at the growing list of successful US stock marketIPOs among the Greek community shows that the financial marketshave embraced shipping more that they have ever done in the past.Shipping is a popular investment on Wall Street at the moment butwhen the market goes the other way, things will get tough.

“Look at OMI. For 20 years it did nothing and look at it now. Todayit is still undervalued, but there is tremendous interest in the stockbecause it pays great dividends. But the question is how will it weathera storm? It will have lousy earnings and will have problems but it willhave more access to capital than anyone else and so will survive. It’sjust a question that some of these companies may become unattractivefor a while and some may become private again,” he said.

Of course, purists will say that it may not be the financial performance of the company that affects stock performance but howwell the financial markets perform in general. According to BasilMavroleon, if you talk to any number of company chairmen they willtell you if that happened, then a lot of them would take their companiesprivate again.

“For the first time in many years, there is a clear and huge return oninvestment and it’s not just tankers, it’s dry cargo, reefers and evencruise. There has been huge growth in all sectors – chemicals and con-tainers. Never before has there been almost an era where all shippinghas been high at the same time.

“But freight rates will go down and may be forced by something wehaven’t anticipated – economic most likely where this insatiable

appetite for crude and commodities won’t be there. History will repeatitself and we will just have too many ships. It’s as simple as that – sup-ply will kill us. The newbuilding orderbook is pretty frightening goingforward: 2009 for tankers is a dubious year with a tremendous amountof ships coming in and phase out is not mandatory for these ships to goanywhere.”

But in this time of excessive ordering and high newbuild prices, howleveraged are ship owners and how exposed will they become if themarkets drop as many predict?

“Well, we don’t have a lot of debt. There is a lot of debt aligned towhat has happened over the last 12 months, in terms of prices. Most ofwhat we have seen up to now has involved cheap ships except if theywere resales. But ships ordered with delivery even for 2007 did not costa lot of money relative to today’s prices. It’s this last year where youhave seen VLCCs go up to $138m.

“Now it’s beginning to show that ships have become very expensive.There is no relation in tankers between the price of the ship and the mar-ket. In the dry trades, there is still a relationship. You would have tohave been asleep not to have written down a lot of your debt over thelast five to six years. I mean the money has been staggering and theearnings have been so huge that anyone with any reasonable businesssense would have put themselves in a strong position.”

Having pockets as deep as Abramovich is one way of surviving adownturn in the market but having the resolve and the nerve to makethings happen will tell if Basil Mavroleon’s predictions are to bebelieved. But after all, that’s what the Greeks are good at. ■


BUSINESS VIEWPOINTGETTING PERSONAL

Basil G. Mavroleon, remains relativelybemused at the thought of a 155 metre, $130million, mega yacht moored a few yards fromhis desk, but he seems more proud of thesmall flotilla of Greek shipping tycoon-ownedyachts moored next to the Pelorus, each ofwhich he points out to me together with thename of its owner

With the sun on its back the Porsche 9ff TRC 91 has a majestic qual-ity. Its flowing features will turn heads on the high street and sendenthusiasts silly with excitement. At a glance it looks very similarto the standard 911 Turbo, but appearances can be deceptive.

Nail the detonator, sorry the accelerator, and in the blink of an eye you are deal-ing with an entirely different beast. A superbike would struggle to stick with you asyou scream past 60mph in 3.5 seconds and waves goodbye to 100mph in less thanfive. At this point those who have started to breathe again snatch second gear in aheartbeat, marvelling at the short-shift box sporting cables from the Ford FIA GTracer, and head off beyond the 150 mark.

The 9ff TRC 91 claims to be the fastest soft-top in the world, but all we knowfor sure is that it is too fast for the Autobahn, the derestricted German racetrackwhich masquerades as a public highway. Jan Fatthaur’s Dortmund-based tuningcompany, 9ff, makers of the TRC 91 and holders of the existing soft-top speedrecord (236mph, set earlier this year in a sister-vehicle despite the untimelyarrival of officers of the law), believes its latest prodigy will touch 245mph, if itwere let out of the cage.

That level of performance is so otherworldly it would stretch the imagination ofGeorge Lucus. OK, the 9ff TRC 91 is not quite as fast as the Millennium Falcon,


LIFESTYLE PORSCHE 9FF

German tuners have created theworld’s fastest soft-top from theskin of a Porsche 911. The 9ffTRC 91 is a symphony in motionand can even tame theAutobahn. Andy Pierce takes adrive on the dark side

but it turns all but the fabled hard-top Bugatti Veyron, the world’sfastest street car, into an insignificant speck in its rear view mirror.

This lightening performance comes from the Standard 911 Turbo’sflat-six cylinder engine, and its beautiful assistants. Fatthaur added twonewly up-rated turbochargers and a modified air filter to boost perform-ance, and that was just for starters. He also mixed in larger injectors,modified cylinder heads and a stainless steel exhaust system.

His reward was an increase in capacity from 3.6 litres to 4.0 litres anda manic 910bhp output. That is double the standard 910 Turbo and not farshy of the veyron’s 1,001bhp, spawned by twice as many cylinders.

All this speed needed to be harnessed. The suspension has beenupdated, presumably to prevent the monster from tearing itself apart.High-performance brakes were a necessity with such anger beneath thebonnet, while Fatthaur also fitted 20-inch wheels all round to help itstick to the road, and because he could.

Driving the TRC 91 has been compared to `twirling a hand grenadeby the pin’. But, if it is shown respect, drivers are in for a treat.A world-leading four-wheel drive system and the Porsche chassis

give phenomenal performance on winding roads, and provide inch

perfect manoeuvrability if mere mortals dare to cross your path. External modifications are more subtle, but are equally dedicated to

the pursuit of speed. A racy front grille has been added to keep oxygenflowing freely to the thirsty engine, with extra air intakes a necessity tokeep the massive and overworked brakes form overheating when youneed them most.

And, as nobody likes a fast lady carrying extra weight, the standardboot lid and wings have been jettisoned and replaced with styled light-weight carbon fibre versions. Additional make-up includes extra side-skirts and aerodynamically enhanced wing mirrors for performance andsex-appeal. Of course, not all of the best things in life are free. TheDortmund Devil will cost on the dark side of £212,000. That is a jaw-dropping 100% increase on the much-loved 911 Turbo, but a snip of theprice of the TRC 91’s hard-top speed cousin, the Bugatti Veyron: whichis five times the price for a roof and a similar amount of fun.

The only ones not screaming with satisfaction at the TRC 91’s per-formance are the green brigade. A fuel consumption of less than 10mpgand emissions to match a garbage truck will give Swampy plenty ofammunition. But, then again, he would have to catch you first. ■


LIFESTYLEPORSCHE 9FF

The 9ff TRC 91 is not quite as fast as the MillenniumFalcon, but it turns all but the fabled hard-top BugattiVeyron, the world’s fastest street car, into an insignificant speck in its rear view mirror


LIFESTYLE PROMS

GlobalvoicesThe BBC Proms is evolving but its globalfeel is nothing new

The sight of wavingUnion Flags and theunmistakable chorus ofLand of Hope andGlory shaking the Royal Albert Hall give the BBC Proms

an unmistakably British feel. But, if you listen closely, amidst the pompand empirical ceremony there is a distinctly global symphony.

And if you thought the Proms would struggle in the modern worldwhere kids sit in and download Iron Maiden and Marilyn Manson ontotheir desktop you are playing from the wrong song sheet. The fabledRed Button and the opportunity to text and email an opinion from afarallows the Proms to achieve exactly what it sets out to do in an erabefore the telephone became a regular household item.

“I am going to run nightly concerts to train the public in easy stages.Popular at first, gradually raising the standard until I have created apublic for classical and modern music,” explained the Proms creator,Robert Newman when proposing the idea at London’s Queens Hall in 1894.

He was true to his word and early revelers could eat, drink and smoketheir way through a three-hour long session of Beethoven for a mere 5pence. Tickets for the entire first season were only just over £I. By 1920the masses standing in the Promenade, the front terrace from which theevent takes its name, were swinging to the sounds of Richard Straus,Debussy, Rakhmaninov, Ravel and Vaughan Williams.

Not even the outbreak of war and the power of nationalist sentimentcould dilute the international flavour of the Proms. Newman, and hispartner and legendary Proms’ conductor, Henry Wood, defied the over-riding opinion of the cultural establishment. They insisted that “thegreatest examples of Music and Art are world possessions and unassail-able even prejudices of the hour.”

Newman and Wood’s vision got a timely boost with the creation ofthe BBC in 1927. Its mandate to “to inform, educate and entertain” wasclearly a match for the Proms’ dream of music for all and the two brands

quickly came together. And despite fears that the broadcasting of theevent would reduce the attendance figures, even the staunchest criticsrealised the ability to access a much wider audience was a positivemove. Wood was certainly pleased and felt he was close to realising hisaim of “truly democratising the message of music, and making itsbeneficent effect universal”.

The bombing of the Queen’s Hall during WWII took the Promsdown the road to a new home at the Royal Albert Hall. But it wouldnot be moved from its eclectic stance. Viennese nights became verymuch the vogue and by the early 1960s international figures wereflooding in to grace the occasion. Georg Solti, Leopold Stokowski and Carlo Maria Giulini raised the curtain for overseas conductors,before the Moscow Radio Orchestra became the first foreign ensem-ble to appear.

A threshold had been crossed and the Russians were soon followedby the Amsterdam Concertgebouw Orchestra, the Polish RadioSymphony Orchestra and the Czech Philharmonic. This influx of for-eign talent in the 1960s changed the Proms irrevocably. All trace of aconservative attitude had been blasted into the dome atop the RoyalAlbert Hall and the Proms was firmly established as an internationalfestival of music.

And it was not just European acts that were attracted to the Proms.Complete concerts by ensembles from India, Thailand, Indonesia andJapan all performed to bring a distinctly global feel at a time when theworld was opening up and Britain was becoming more multi-cultural bythe day. From 1961 new works were commissioned every season allow-ing it to adapt to evolving musical trends and creating a platform forcontemporary composers from around the world. In order to accommo-date the ever-increasing number of international acts the proms has ➩


LIFESTYLEPROMS

Not even the outbreak of war and the power of nationalist sentiment could dilute the international flavour of the Proms

If you thought the Proms would struggle in the modern worldwhere kids sit in and download Iron Maiden and Marilyn Mansononto their desktop you are playing from the wrong song sheet

undergone a massive growth. By the Centenary event in 1994, the fes-tival included over 70 concerts per year.

The 2007 proms promises to be the freshest ever. A group of youngmusicians from Soweto in South Africa is set to take centre stage to cel-ebrate its own 10 year anniversary. Formed by violinist RosemaryNalden, the Buskaid Soweto String Ensemble will join Sir John EliotGardiner and perform excerpts from stage works by Rameau. The mixof dance styles and historic choreography from Paris will be compli-mented by the South African youngsters' own creations.

Rameau’s 17th-century French genius may appear a strange choicebut Gardiner has said he and the Soweto Strings are a perfect match andbelieves the spontaneous and uninhibited nature of the music will offera dynamic spectacle.

The global goodwill does not stop there. The Simon Bolivar NationalYouth Orchestra of Venezuela is there to celebrate the success of the ElSistema project, which for 30 years has taught music to disadvantagedchildren with the belief that it would help them out of poverty.

But for sheer joy and flag waving fun the Last Night of the Proms isstill the place to be seen. A traditional celebration of British tradition itmay be, but parochial it certainly is not. It still encapsulates the spirit ofthe Proms with leading international artists and an all-embracing pro-gramme, introducing new works alongside much-loved classics andbringing together the different themes of the season. ■

Proms Time Line

1885 The first Prom is performed at Queen’s Hall, London1927 BBC takes over the running of the Proms1930 BBC Symphony Orchestra formed and becomes the Proms’

main orchestra1942 The Proms moves to its current home at the Royal Albert Hall1963 Leopold Stokowski, Georg Solti and Carlo Maria Giulini

become first major international conductors to perform at the Proms

1970 Soft Machine first “pop” band to appear at the Proms1996 Launch of “Proms in the Park” with live broadcasts in

Manchester, Birmingham, Liverpool, Hull, Leeds, Rotherham, Bradford and Derby

2002 The Proms is broadcast online for the first time2005 The Proms is truly global as the WAP mobile facility is launched

Events on the horizon

Edinburgh International Music FestivalAugust 10 to September 2, 2007

The Edinburgh International Festival presents a rich programme ofclassical music, theatre, opera and dance in six major theatres andconcert halls and a number of smaller venues, over a three-weekperiod in late summer each year. In addition to mounting the annualthree week programme of events, the Festival has a year-round programme of education and outreach work, aimed at all ages fromprimary school pupils to adults.

Bermuda Music FestivalOctober 3 to 6, 2007

The Bermuda Music Festival, formerly the Bermuda Jazz Festival,features an impressive array of vocal and instrumental talent on astage built over the water at the Royal Navy Dockyard. The festivalallows guests to enjoy both the sounds of international performersand local culture, with Al Green, Joss Stone and Regina Carter allhaving performed here in the past.

Glebe Music FestivalNovember 9 to December 2, 2007

Australia’s Glebe Music Festival grew out of the many informal musical soirees held at the early 19th century Margaretta Cottagesince the late 1960s. The underlying philosophy of the Glebe MusicFestival is to bring together musicians at different stages of theircareers in the intimate atmosphere of Margaretta Cottage. With largechoirs this has expanded to the performance of major choral worksat St Scholastica's Chapel in Glebe.

Dresden Classical Music Festival May 9 to May 25, 2008

The Dresden Music Festival is the largest classic festival in Germany. It has an abundance of international influence and an outstandingposition among the famous European music festivals. Attracting150,000 guests in 2003, the first season under the directorship of thewell-known conductor Hartmut Haenchen, the Dresden Music Festivalhas expanded every years since then. The unmistakable image of thefestival and its structure arises from its annually changing themes andcombines it with a new fundamental musical term: series. With thecombination of theme and series, Haenchen made the festival a well-recognisable event within the German festival scenery.


LIFESTYLE PROMS

For sheer joy and flag waving fun the Last Night of the Proms is still the place to be seen. A traditional celebration of British tradition it may be, but parochial it certainly is not

The 2007 proms promisesto be the freshest ever

Shipping Industry Glencore

Documents

Transcript of Shipping Industry Glencore