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Goal-based standards A long way to go

October 2009 � TANKEROperator 01

ContentsMarketsTonne-mile ratios could increase next year

FinanceTanker assets sliding

German Report� KG collapse could stall investments� RWO awaits final ballast water approval � GL’s revolutionary tanker design

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Although there are signs of a general improvement,albeit small, it is a brave person who is willing topredict a return to something like normal, whateverthat is.However, the boys and girls at accountants and consultants Moore

Stephens have stuck their neck out.

In the latest Shipping Confidence Survey, the company said that

there was a continuing rise in overall confidence levels in the shipping

industry over the past three months.

There was, somewhat unsurprisingly, an increased awareness of the

impact of China’s growth pattern on the shipping sector.

The average confidence level expressed by respondents, on a scale of

1 to 10, was 5.7, compared to 5.5 in the previous survey in May 2009.

Owners, managers, charterers and brokers all exhibited increased

confidence in the shipping markets in which they operate.

A number of people acknowledged that the start of a recovery was

under way, and also recognised the opportunity today to buy vessels at

historically low prices. “The shipping market has started to pick up this

year after the effect of the global economic crises,” noted one

respondent, while another commented, “The recovery of the global

economy will result in strong demand for tonnage as delayed projects

get up and running again.”

Less optimistic comments included predictions that excessive

tonnage oversupply would keep the lid on freight rates, and the catch-

all observation, “Hoping for the best, getting ready for the worst.”

Another respondent warned, “Because two newbuildings are being

delivered for every vessel scrapped, the shipping market will not be

able to pick up over the next three-to-four years. And it may

deteriorate even further, with a number of owners forced into

bankruptcy.”

China was on the minds of a number of respondents, one of whom

noted, “China is now the producer, the consumer, the trader and the

transporter. It has got the cheapest and the most plentiful supply of

labour and it is possibly the richest country in the world. None of these

things can be good for the international shipping industry.” Another

remarked, “China’s influence in the shipping markets is a risk which

has not yet been fully factored in. China will control a lot of cheap new

tonnage, with the result that a number of independent shipowners will

not have the opportunity to compete.”

The survey revealed a slight increase in the number of respondents

expecting to make a major investment or significant development over

the next 12 months at 5.1 out of 10 overall. Charterers remained the

most confident, although they, together with managers, actually recorded

a drop in their expectation levels compared to the last survey. Owners

and brokers, meanwhile, were more confident of making a major

investment than they were three months ago.

For the third survey in succession, demand trends were identified as

the single most important factor likely to affect their business

performance over the coming year, followed by competition and the cost

and availability of finance.

There was a one percentage point fall overall, to 45%, in the number

of respondents who expected finance costs to rise over the coming year.

Having recorded a 13% point fall in this category to a level of 41% in

the previous survey, charterers appear to have had a rethink over the

past three months, with the result that 50% of them now expect finance

costs to rise over the coming year.

A number of respondents remarked on the hard-line attitude adopted

by the banks and by other lenders, while one made the succinct

observation that, “High finance costs and reduced availability have been

the cause of many problems for many owners. Today, if you can buy a

ship for cash and let it out to a reliable charterer for, say, two years, at

least you are making a return on equity of between 10% and 15%,

which is better than the 1% you will get from the banks.”

Tanker charteringTurning to the tanker charter market, the picture was largely as before.

There was a marked difference of opinion, however, between the

numbers of owners (46%) and the numbers of charterers (35%)

predicting higher rates, the latter figure comparing with the 45%

recorded in the last survey.

Moore Stephens shipping partner, Richard Greiner said, “Although

the overall confidence level of 5.7 revealed in the survey is low

compared to the 6.8 posted at the time of the first survey in May 2008,

it still represents an increase for the third successive quarter. In some

ways this mirrors what is happening in the global economy, where there

are now very real indications that a recovery is under way.”

Remarking on finance opportunities, Greiner said; “Shipping should

not despair. The process of lending has inevitably become more

selective, and the terms more onerous, yet there are still banks which are

lending money. Aspiring borrowers with realistic demands and with

well-written, easy-to-understand business plans which plot a clear path

to profitability will have the best chance of success.”

COMMENT

Green-ish shoots of recovery seen coming through

TO

TANKEROperator � October 200902

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p2-23:p2-7.qxd 02/10/2009 10:25 Page 2

Specific data is available sometime after actual cargomovements, which whileallowing for a higher accuracy,causes some delay in data analysis.

Having updated our records with the

complete first half of 2009, we can now

decipher the gains/losses across the dirty

tanker sectors by import/export region. It is

of no surprise that demand for tankers is

down on a macro level, but the full picture

can only be gained by “peeling back the

onion,” McQuilling Services said in its

weekly report.

We blamed the unseasonable spikes of

2008 on supply constraints, which absorbed

significant tonnage and drove the spot

market to impressively high second quarter

levels, despite tanker demand exhibiting the

beginning of its decline.

However, the picture in 2009 is quite

different. Net fleet growth continues across

the sectors, unchecked by 2007-8’s surge in

drybulk and heavy-lift conversions.

Table 1 illustrates the year-on-year change

in tonne-mile demand across most tanker

sectors, having dropped nearly 1.6% overall

versus 1H08. This is hardly surprising, and

easily attributed to the demand destruction

for crude oil since last year.

Furthermore, that the fleet has expanded

by 120 newbuildings this year adds insult to

injury when observing the tumbling act

freight rates have undergone.

Year-on-year demand for VLCCs is down

4.3% overall. Referring to Table 2, this is

largely driven by huge drops in tonne-mile

demand from the Caribbean & US out of the

Arabian Gulf and West Africa.

This was largely expected given the US’s

decreased consumption of crude after last

year’s record price tag of $147 per barrel,

and would certainly explain why rates have

on TD1 (280,000 tonnes – AG/US Gulf)

averaged a dismal WS 30.7 during 1H09.

Increased demand for VLCCs was seen

from Europe and India, largely attributed to

declining production output in the North Sea

for the former, and increased refinery

capacity for the latter; however, these

imports commanded only a 4% share of the

fleet, whereas nearly a 50% share of VLCCs

were needed for the AG/Far East trades.

One unexpected rise in demand has been

the 8.6% growth for dirty Panamaxes over

1H08 levels. We note that this fleet has seen

a slightly negative net supply growth.

However, we are reminded of the ambiguity

of this tally owing to LR1 (coated Panamax)

owners’ option to ‘dirty up.’ Furthermore,

our database shows spot fixtures for this

sector are down by roughly 20% on a global

basis, which leaves this growth in tonne-

mile demand a bit puzzling.

Referring to Table 3, the largest increases

in demand for Panamaxes came from the

Caribbean & US (which coincidentally

experienced the largest drop in VLCC

demand as discussed above). This was

largely answered by short-haul exports from

the Caribbean, Central and South Americas,

though at the expense of long-haul cargoes

from the North Sea.

The largest decrease in tonne-mile demand

was seen ex-Arabian Gulf to the Far East

and India, though these trades only make up

a small share of Panamax business. With all

of these positive notes on the Panamax

sector, one begins to wonder why spot

earnings are down 59% year-on-year on TD

10 (50,000 tonnes– Caribbean/US Atlantic).

We believe the answer may lie with an

increasing availability of tonnage in this

region, McQuilling said.

The Panamax trade within the Americas

already commanded a huge 23% share of the

fleet’s business in 2008. Increased tonne-

mile demand from this region in 2009 saw

this rise to over 28%. With so many ships

trading within this short-haul region, spot

tonnage availability has increased

significantly, leaving charterers with a large

fleet list to work from when coming into

the market.

INDUSTRY - MARKETS


Hang on in thereTanker demand is typically measured in tonne-miles, taking into account

not only the cargo being moved, but also the distance it travels.

Table 1: Year-on-Year Comparison: DirtyTonne-Mile Demand, 1H09 / 1H08.

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p2-23:p2-7.qxd 02/10/2009 10:25 Page 3

We believe that this phenomenon has

contributed to the depressed rates

experienced in this sector despite its

increased demand.

The International Energy Agency (IEA)

has been pointing to decreasing oil demand

since the beginning of 2008. Given that the

dirty tanker demand is correlated to the

overall world oil demand, its lead could have

easily pointed to the downfall in tanker rates

since last year.

Accordingly, the first half of 2009

suffered a 1.59% decline in tonne-mile

demand atop a swelling supply of ships, as

well a declining demand for crude. This

combination has left spot earnings about

63% down since last year.

What’s next? The latest forecast by the IEA calls for oil

demand to end 2009 averaging 83.2 mill

barrels per day, down 3% from 85.8 mill in

2008. But as the global outlook improves

amid signs of economic recovery, IEA’s

forecast for 2010 is an increase to world oil

demand to 86.3 mill.

Additionally, changing distances between

oil producers and refiners, various supply

reduction factors (such as the impeding

single-hull phase out), possible pipeline

closures, among many other factors could

contribute to significant fluctuations in the

demand for tankers moving forward.

While we can confidently predict that

tonne-mile demand data for Q3 will

show a further fall from 1H09, there

remains a number of factors that could

reverse this trend into 2010. Regardless

the result, we look forward to the

opportunity to decipher our next batch of

tanker demand data, peeling back the next

proverbial layer of onion, McQuilling

concluded. TO

INDUSTRY – MARKETS


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Table 2: Year-on-Year VLCC Comparison: Dirty Ton-Mile Demand, 1H09 / 1H08.

Table 3: Year-on-Year Panamax Comparison: Dirty Ton-Mile Demand, 1H09 / 1H08.

p2-23:p2-7.qxd 02/10/2009 10:25 Page 4

Any delays occurring on thePanama, Suez Canals, or theBosporus would impact on supplyand demand by tying up tonnagethat would otherwise be on the open market.

Collectively, the Bosporus and Dardanelles

are known as the Turkish Straits and despite

being treacherous to navigate, due to tight 90

deg turns and varied visibility, they play host

to around 140 ships per day transiting- about

11% being tankers.

The geography and the sheer number of

vessels often have the shippers wondering

about the pipeline option. Bad weather

causes bottlenecks at either end, resulting in

large tankers being delayed, sometimes for

several days.

However, the attraction of the straits is that

some 130 mill tonnes of crude and petroleum

products are exported from the Black Sea

ports each year.

Having retained control of the Bosporus and

Dardanelles throughout its independence,

Turkey claims the right to regulate traffic

passing through. Both straits encompass some

30 km of Turkey’s coastline on both sides and

are only 0.75 km wide at their narrowest point

in the centre of Istanbul and only allow a vessel

with a maximum draught of 15 m to transit.

Currently, Turkey does not enforce strict

control of the straits, nor does it levy tolls or

restrict trade. It only closes the waterways in

times of an environmental or security risk.

According to Turkish law, the straits could

be shut for economic, environmental, or

security crises.

To reduce the risk of pollution, following

several high profile incidents down the years,

Turkey has initiated a night time ban on all

vessels transiting of over 200 m in length. All

vessels of over 300 m are banned outright in the

Bosporus, except in special circumstances,

meaning that VLCC transits have been ruled out.

And of course, there is also an air draft restriction

due to the two bridges spanning the Bosporus.

During the winter period, fog and lost

daylight hours can cause chaos to large ship

transits, leading to delays of up to 20 days.

These criteria are often taken into

consideration when drafting a charterparty for

vessels needing to transit the area, especially

if time sensitivity is involved. Delays could

also occur in the future should terrorists

succeed in forcing the authorities to inspect

each vessel before starting a transit.

Export terminalsThe Black Sea houses many major exporting

terminals, including Novorossiysk,

Constantza, Bourgas, Batumi, Supsa and

Odessa. Different grades of crude oil are

shipped, notably Kumkol, Tengiz and Azeri

light from Kazakhstan and Georgia, plus

Urals, CPC blend and Soviet Export blend

from Russia.

McQuilling said that it was important to

note the attractiveness of many of the Black

Sea crudes. For example, Azeri light can trade

at a premium to other types of crude, due to

its light/sweet attributes, which can produce

more attractive products after refining.

Although Russia diverted some of its oil

exports through Black Sea ports in 2006,

planned production increases from Azerbaijan

and Kazakhstan may push more oil products

through the straits in the future. However, at

present there is still a steady market for

Suezmax, Aframax and Panamax tonnage

needed to export crude from the region.

From January to April this year, Suezmaxes

carried about 9.45 mill tonnes crude per

month from the Black Sea/eastern

Mediterranean and North African region,

compared to 9.46 mill tonnes in the

corresponding period of 2008.

Interestingly, McQuilling said that January

totalled 10.5 mill tonnes only to fall to 8.4

mill tonnes by April. However, while figures

were not available thus far for May-August,

the consultancy said that it had noticed a

steady increase in TD 6 fixtures (135,000

tonne, Black Sea-Mediterranean).

The delays caused by bad weather affecting

the straits in winter, plus the lost daylight

hours for large ship transits, have been

diminishing since 2003. Nevertheless,

McQuilling found that since 2002, the

increase in transit times were coinciding with

rate hikes on the TD 6 route, except for winter

2008-2009.

This was because the recession had started to

take its toll, resulting in the growing supply of

tankers amidst a collapse in oil demand, left all

the tanker rates in free fall, regardless of delays

at the entrances of the Turkish straits.

Speculation is rife that we are coming to the

end of the recession. However, tonnage

available was still outweighing demand. With

Autumn approaching and a steady climb being

observed in the amount of tonnage picking up

oil cargoes in the Black Sea, the question is will

delays affect the spot market gain, or will the

spot market remain so unbalanced that delays

will have little affect on TD 6 earnings?


TO

INDUSTRY - MARKETS

Turkish Straits-major tanker artery

In the third in a trilogy of articles focusing on global choke points for shipping,

McQuilling Services took a look at the Bosporus and Dardanelles.

The Suezmax Aegean Horizon navigates through the narrowest part of the Bosporus. Photo credit- Chris Brooks (ShipFoto).

p2-23:p2-7.qxd 02/10/2009 10:25 Page 5


INDUSTRY - FINANCE

In the previous review on tanker assetprices (March 2009, page 4), there werefundamental issues within the financialsystem that had rendered the creditmarkets and world trade, and by association,

the shipping market almost un-functional.

However, at that time, the trade of crude oil

was holding up fairly well, given the

circumstances, and given the great differential

between the spot and the futures markets for

oil, there was an exacerbated state of contango

that had employed at that time more than 60

vessels as storage facilities.

Six months later, the reality for the tanker

markets is less promising. Although the

financial markets have slowly started thawing

and trade finance has becoming available, the

trade of oil, and thus tanker freight rates, has

dropped precipitously since then.

On the contrary,the drybulk market has

improved since March, despite the summer’s

‘slow steaming’ and soft correction. In order

to provide a frame of reference, in Graph A,

the Baltic Exchange freight indices are

Tanker asset priceson a continuousdeclining trend

Earlier in the year, the pages of the TA�KEROperator hosted a brief overview of tanker asset prices. It seems that a lot of time has passed in last six months

and a lot has changed during this time; once again, Basil M Karatzas presents

an updated review of the developments in the present tanker market.

p2-23:p2-7.qxd 02/10/2009 10:25 Page 6

depicted since January 2004; all indices

incorporate spot and period markets for the

major asset types that constitute each index,

and thus the indices can be assumed

representative of each market: The Baltic

Exchange Dry Index (BDI) covers the

drybulk markets (capesize, panamax,

supramax and handysize vessels); the Baltic

Dirty Tanker Index (BDTI) covers the crude

oil market (VLCC, Suezmax, Aframax and

Panamaxes in major trading routes), while

the Baltic Clean Tanker Index (BCTI)

constitutes clean Panamax, Handymax and

Handysize tankers.

The tanker indices, when compared to

drybulk markets, have been exhibiting much

lower volatility since 2004. However, one has

to note that while the drybulk markets have

staged an impressive recovery, as least when

viewed in percentage improvement terms from

the absolute bottom, tanker rates have

continued languishing and presently the tanker

indices are trading at approximately half their

value of March 2009. In quantitative terms,

the BDTI is down by 25% since March and

the BCTI is down by 32% since February,

while the drybulk markets have shown an

improvement of 36%, despite the recent

summer correction.

Different environmentDuring the boom years of the shipping cycle

and as late as in the Autumn of last year, any

decline in freight rates was not necessarily

reflected on asset prices as owners were

reluctant to lower their asking prices in an

otherwise very strong market environment

(robust world trade and growth, easy credit,

etc). However, the recent decline in tanker

freight rates, in a completely different macro

environment, has shown a different aspect

and has indicated a direct and significant

relationship on the value of tankers. There

has been a relative period of sale and

purchase inactivity for tankers in the first

five months of 2009, as very few buyers

were convinced enough to acquire tankers

(primarily with total equity due to lack of

debt financing) while sellers were holding

out for a freight rebound.

With a continuous and precipitous

deterioration of tanker freight rates to such

low levels as to be significantly below

operating cash flow break-even, with

consensus estimates that world economies will

not start improving at least until the end of

2010, at the very earliest, and with new

deliveries keep flooding an anemic market,

weak owners have started accepting bidding

prices that now establish a new lower plateau

and benchmark in the sector.

Many market observers have stated that it is

only a matter of time before the few

transactions thus far at such low levels will

become the new standard, and with market

pressures keep piling up, asset prices might

trend to even lower levels.

Sliding VLCCsThe four major tanker sectors are reviewed in

the next four graphs both in terms of asset

pricing and also one-year timecharter from

January 2004 until the end of August 2009.

The VLCC market in Graph 2, the most

macro-economically oriented tanker sector

and thus the most volatile, had been on a

positively slopping trend since 2005 when

five-year old vessels having appreciated from

about $75 mill in January 2004 to about $160

mill by December 2008, while presently are

valued at about $85 mill. Ten-year old

VLCCs seem to have made a full round trip

starting at about $55 mill in early 2004,

trading as high as $125 mill in December

2008 and presently back to the point of origin.

On the right-hand-scale of the same graph, the

one-year timecharter VLLC rate is depicted,

and presently such vessels are earning less


INDUSTRY - FINANCE

Graph 1: The Baltic Indices - since 2004 - SEP 2009.

Graph 2: VLCC Asset & TC - since JAN2004 - VLCCs - SEP 2009.

Asset

Valu

es (

in U

S$ m

il) 1-y

r TC

Ra

te (U

S$

/d)

p2-23:p2-7.qxd 02/10/2009 10:25 Page 7

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p2-23:p2-7.qxd 02/10/2009 10:25 Page 8

than the beginning of the super-cycle: from

about $42,000 per day to as high as $90,000

per day in December 2008 to the present level

of about $36,000 per day.

On to a still macro-economically oriented

tanker sector but at smaller scale and different

market dynamics, five-year-old Suezmaxes

had doubled in price from January 2004 to

December 2008 to about $100 mill before

falling back to about $55 mill region at

present (Graph 3). Ten-year old vessels have

fared much better in terms of relative

valuation as they had moved from about $25

mill to as high as about $80 mill last

December and presently valued at $45 mill,

still a significant premium over their valuation

in early 2004.

However, in terms of earnings, the present

market at $25,000 per day is well below the

$35,000 per day level obtainable at the

beginning of 2004 and the $55,000 per day

level achievable still in December 2008 for

one-year timecharters.

Moving on to the workhorse of the tanker

market (Graph 4), asset prices for five-year-

old Aframaxes had moved from just below

$40 mill to just below $80 mill from 2004 to

2008 and presently below $40 mill, while 10-

year vessels experienced a similar cycle from

just below $30 mill to above $60 mill and

presently below $30 mill. Similarly, one-year

timecharter levels had moved from $25,000

per day to about $43,000 per day in December

2008 but in a free fall since then to about

$17,000 per day currently.

In the last graph, Graph 5, products tankers

that trade in a refined petroleum products

market, unlike the previous tanker sectors

that trade in the crude oil markets, have

shown a similar path of high appreciation

between early 2004 and late 2008 (from $30

mill to $55 mill for five-year-olds and from

$20 mill to $45 mill, respectively) and a

parallel free fall since then to below $30 mill

for the five-year old and about $22 mill for

the 10 year old.

What is different, however, in the products

tanker market is that freight rates had peaked

much earlier than the crude oil tankers: one-

year timecharter had moved from below

$15,000 per day to about $30,000 per day in

two instances in the summers of 2005 and

2006 (think of Hurricanes Rita, Katrina and

spot rates of excess $100,000 per day), while

there is a gradual softening since then to about

$22,000 per day in the Autumn of 2008 and

$12,000 per day currently.

In reviewing the four tanker graphs, it is

clear that all major tanker sectors have, more

or less, followed the paths of parallel lives

with peaks and troughs generally

corresponding to each other, the nuisances

and specific timing within each sector

notwithstanding.

It is worth noting that in terms of asset

pricing, with the exception of Suezmaxes

that are comparatively higher at the end than

the beginning of the period under

examination, there is a full cycle with all

(very sizeable in each case) asset price

appreciation ‘committed to the deep’ and the

seven seas.

At present, all four assets classes in the

tanker sector have been trading below their

corresponding average for five and 10-year-

old vessels by about 30%, with a 10-year old

Suezmax, at the one extreme of the range,

trading 28% below the average for such a

vessel, while a 10-year old Aframax, at the

other extreme, trading at 37% discount to the

corresponding average.

Narrowing price differentialAnother observation worth mentioning is that

on average the price differential between a

five and 10-year old tanker within each asset

class between January 2004 and August 2009

has narrowed in both absolute and percentage

terms, with the most notable example of

Suezmaxes where the $27 mill price

differential has narrowed to $11 mill between

five and 10-year old vessels between January

2004 and August 2009. A corollary to this

observation, that price differentiation due to

age becomes in-elastic, is that differently

aged vessels will provide different profile

under investment valuations as ‘going-

concerns’ or ‘asset play’, and therefore will

be investment targets by buyers with

different investment criteria.

The first eight months of this year have

been a lesson in history for many industries

and industry sectors. With shipping at the

epicenter of world trade and the financial

markets, the impact of the financial turmoil

has been especially amplified. While the


INDUSTRY - FINANCE

Graph 3: S'max & TC - since JAN2004 - Suezmax - SEP 2009.

Graph 4: Aframax & TC - since JAN2004 - Aframax - SEP 2009.

As

se

t V

alu

es

(in

US

$ m

il) 1

-yr T

C R

ate

(US

$/d

)A

sset

Valu

es (

in U

S$ m

il) 1-y

r TC

Rate

(US

$/d

)

p2-23:p2-7.qxd 02/10/2009 10:25 Page 9

INDUSTRY - FINANCE


drybulk market went down fast by the bow in

short order upon the freezing of the financial

markets, the tanker market managed to

maintain an even keel until very late last year

and early 2009.

The fact that tanker owners and companies

are, in general, better capitalized and managed

than drybulk companies has not managed to

absolve the sector; on the contrary, the

strength of the tanker owners implicitly

ensures that the tanker orderbook will likely

be delivered in its entirety.

The contango effect on oil prices that at

certain points during the year had absorbed

more than 60 VLCCs (about 10% of the

world fleet) could not salvage the market.

The much anticipated single-hull tanker

mandatory phase-out in 2010 and the

estimated growth of the world economies in

late 2010 might be the next safe harbour for

the tanker market. But, again, shipping is

an industry of surprises…

*Basil M Karatzis is managing director forprojects & finance with Compass MaritimeServices (CMS), based in �ew Jersey. CMSis a ship brokerage and maritime financearranger concern. He can be contacted at [email protected],+201 5859999, or www.compassMar.com.

TO

Footnote: The data was derived fromthe Compass Maritime Services (CMS)database, from the Baltic ExchangeSale and Purchase Assessment (BSPA)on which CMS is a panel member, andfrom Clarksons Research Services.

Graph 5: MR & TC- since JAN2004 - MR - SEP 2009.

As

se

t V

alu

es

(in

US

$ m

il) 1-y

r TC

Ra

te (U

S$

/d)

p2-23:p2-7.qxd 02/10/2009 10:25 Page 10


INDUSTRY - FOCUS ON GERMANY

German owners accounted for 424tankers of 22.2 mill dwt of over1,000 gt. Of course, severalmore have entered the fleet thisyear on the back of the recent newbuilding

boom.

Although the German tanker owners,

managers and operators are suffering in

today’s climate of low returns, perhaps they

are better off than their containership

owner/manager counterparts, some of which

are having trouble in financing their huge

newbuilding portfolios.

The so called ‘KG’ system is all but dead as

investors using this scheme would expect

around an 8% return on their investment,

which in today’s market is virtually

impossible to achieve. Added to this, is the

banks’ negative attitude towards lending funds

for any investment project, least of all for

shipping funds, most of which need topping

up with fresh finance.

One leading owner/operator told

TA�KEROperator that the German banks hadtightened up their vetting procedures and were

far more risk averse. The credit rating/risk

management departments now thoroughly

analyse a company’s performance and modusoperandi when a request for financing ispresented.

Newly elected Chancellor Angela Merkel’s

incoming government will no doubt face

demands for help finance the massive

newbuilding projects by way of state loan

guarantees.

In general, German shipping banks face a

severe run on their equity from their loan

commitments, which has all but stopped them

going after new business.

Indeed, one of the largest, HSH Nordbank,

had to be bailed out by the states of Schleswig

Holstein and Hamburg. By 2012, the ship

finance divisions of Deutsche Schiffsbank,

Commerzbank and Dresdner Bank will be

consolidated under the banner of Schiffsbank,

once Commerzbank has completed its

takeover of the other two banks.

Most of the owners spoken with by

TA�KEROperator in the chemical/productssector were reasonably confident that rates

would stabilise or even rise towards the end of

this year, or the beginning of 2010 through

2011. Opinions were mixed as to whether it

was better to go for long term contracts, or

play the spot market in today’s moribund

situation.

Many German-controlled vessels operate in

According to figures produced by LR Fairplay for the Verband Deutscher Reeder

(German Shipowners’ Association) at the end of last year,

Germany stood in fifth place in the world’s tanker league table.

Chemical/producttankers at the vanguardof German investment

p2-23:p2-7.qxd 02/10/2009 10:25 Page 11

pooling arrangements. Indeed new pools are

still springing up worldwide. Some are run

from Germany, most notably UPT and the

newly formed Seatramp Intermediate

Tanker Pool, which started operations earlier

this year.

The Seatramp pool is commercially

managed by Hellespont Tankers and thus far

has only one member. However, talks are

ongoing with other German and overseas

interests about participating. Hellespont’s

three 13,000 dwt IMO II chemical tankers and

the first of the company’s eight 17,000 dwt

IMO II chemical tankers – HellespontCenturion - have already joined the pool.

The seven remaining newbuilding chemical

carriers will join the pool once they are

delivered from Sekwang Shipbuilding later

this year and through 2011. They will be

capable of lifting up to 15 different cargo

grades in their epoxy coated tanks.

Following her delivery from Sekwang,

Hellespont Centurion loaded palm oil inIndonesia for Mediterranean discharge. This is

a cargo that needs heating, which helps to cure

the new coatings in the cargo tanks.

One of smaller intermediate tankers, the

13,000 dwt Hellespont Credo, was put under

the German flag, but a decision to register

another vessel in Germany was deferred due

to the extra costs involved and the lack of

suitable German speaking masters and chief

engineers.

Hellespont Hammonia undertakes the

technical management of the vessels and also

has crude and product tankers on its books.

All the larger tonnage is timechartered out to

Sanko who commercially operates the tankers,

which in turn creates a return for the KG

shareholders. One of the Sanko-chartered



Hellespont Trader is long term chartered to Sanko.

p2-23:p2-7.qxd 02/10/2009 10:25 Page 12

tankers - Hellespont Trust - is due to enterHeidmar’s Blue Fin Suezmax pool at the end

of this year, joining the Hellespont Triumph. Seatramp is located in a separate office in

Hamburg to Hellespont in order to give the

pool its own identity and to show

transparency. It also uses different IT systems

to its parent.

Although 2009 has proved to be a bad year

for intermediate chemical/products tankers,

there are signs of a slow recovery taking

place. Seatramp’s current commercial strategy

is to fix member vessels on short timecharter

agreements. Other company vessels joining

the pool will be timechartered in on a variable

rate basis, and Hellespont Tankers will then

undertake their commercial management.

It is not the intention of the pool’s managers

to look for coas until a critical mass has been

attained of around 20-25 vessels, which the

company hopes to achieve by 2011. This

number of vessels will give the pool more

flexibility to move the tonnage around.

Charter business is being sought worldwide,

although northwest Europe is currently

offering better rates than elsewhere, despite a

lot of tonnage being available.

In a management shakeup, Phrixos B

Papachristidis was recently appointed

chairman of the executive board and

managing director of Hellespont AG & Co

KG, the parent company of the German-based

Hellespont shipmanagement and marine

services group.

His appointment followed the recent shock

resignation of Christian Freiherr von

Oldershausen, who had been CEO since 2007.

Meanwhile, other appointments at

Hellespont included, Christian Ramm,

managing director of Hellespont Hammonia

GmbH & Co KG, who joined Papachristidis

and Matthias Imreke on the executive board of

Hellespont AG & Co KG, and Christian

Stensaker, commercial director of Hellespont

Tankers AG & Co KG, who has become

managing director of that company.

In another move, Alexander Papachristidis-

Bove was appointed chairman of the board

and managing director of Hellespont

Steamship Corp, the Piraeus-based

shipmanagement and marine services

company, with effect from 1st October, 2009.

He replaces Dr Mike Kennedy, who

assumes the role of managing director of

Hellespont Consultants Corp and remains

responsible for the company’s newbuilding

programme.

As part of a plan to streamline the

organisation, the Hellespont Group’s entire

Piraeus-based staff will be consolidated under

Hellespont Steamship Corp, from which all

shipmanagement and other marine services

will be performed.

Other changes at Hellespont Steamship

Corp will see an enlarged board of directors

which, apart from Papachristidis and Dr

Kennedy, will include marine director Capt

John Kazazis, finance director George

Hadjigeorgiou and technical director Petros

Tsevas. All are long-standing members of

the organisation.

Although run from Limassol, another pool

member – Interorient - has a significant

presence in Hamburg.

All of the 64 product carriers in

Interorient’s fleet operate in the Norient

Products Pool (NPP), which is run with

NORDEN and commercially operated out of

Copenhagen. Another 15 tankers will join

NPP during the coming two years.

NPP commercially manages Handysize

chemical/product carriers, MRs, LR1s and

LR2s. A number of the vessels are Ice Class

1A and 1B for Baltic operations and although

the pool originally concentrated on European

trading when it started operations in 2005,

now the charters take the vessels worldwide.

The majority lift clean product cargoes.

To help look after the fleet worldwide, NPP

offices have been opened in Singapore and in

Annapolis (Md).

Around 29 vessels are managed from

Interorient’s Hamburg office – 25 tankers and

four containerships. The latest vessel –

�orient Scorpius - was delivered from theRomanian shipyard of Santierul Naval

Constanta in May and is the last of a series of

four 41,000 dwt chemical/products tankers.

This series was based on a design by

Romanian tanker shipping concern

Histria/Icepronav, which has several sister

ships in service.

One advantage of being in Hamburg is that

following the credit crunch, Interorient can

gain quick access to the German banks and

KG fund managers as during the economic

crisis, some of the banks have merged and all

have considerably tightened up their vetting

procedures with the affect that risk

management has become a much more

important role within the banks.

This year the total Handysize/MR fleet is

due to grow by around 14%, but during 2010

this percentage will reduce and will become

almost zero in 2011 and maybe shrink

thereafter. Coupled with this is the prospect of

an increase in average tonne/miles, an

Interorient spokesman said.

As many owners have said to

TA�KEROperator, next year could be a timefor opportunities for those holding cash or

credit lines on the back of falling newbuilding

and secondhand prices, plus distressed sales.

Tanker deliveriesMeanwhile, relative newcomer Offen

Tankers, an offshoot of the Claus-Peter Offen

group, has started taking delivery of the next

series of product tankers.

At the end of last year, Offen Tankers took

delivery of the eighth and last in a series of

36,000 dwt Ice class 1 A chemical/product

tanker – CPO England. All eight are operatedtogether with another eight similar vessels in a

commercial co-operation agreement with

Broström, Paris, today part of the AP

Möller/Maersk group.

Following the delivery of the series of

smaller vessels, in June of this year, the first

of eight 52,000 dwt oil and product tankers –

CPO Korea – was delivered by HyundaiMipo. All eight will be commercially operated

by ST Shipping, Glencore’s shipping arm.

Offen Tankers head Stephan Polomsky

explained that the company always upgrades

the original good specification of the

Hyundai Mipo designs by a substantial

amount above the normal contract price on

these tanker types.

The enhancements and improvements

include the use of European equipment

manufacturers and extra features like Ice

Class, the fitting of bow thrusters, as well as

extra pumping, IG and tank cleaning

capacities. Polomsky explained that these

upgrades and improvements were aimed at

achieving faster turnaround times during cargo

operation, that is when loading, discharging

and tank cleaning.



Phrixos B Papachristidis.

p2-23:p2-7.qxd 02/10/2009 10:25 Page 13

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“We are new, so we can think new and

future - orientated,” he explained. Each tanker

is fitted with a dual ECDIS system and thus

no paper charts are carried. A network of

around 10 PCs is installed on each ship

utilising the management system Ulysses’

Task Assistant compromising the function of

planned maintenance (PMS), purchasing and

quality management.

“This is not only a quality management

system, it is user friendly and follows a

predefined workflow, which means that we are

virtually paperless,” he explained. “Everything

is integrated in one system on the ship and in

the office, double entries are avoided and all

steps/actions are traceable.” He also said that

by using this system, QA audits and vetting

results are worked out much faster.

“We use inspections to improve our

operation and performance. Due to the systems

installed, everybody is ‘hooked up’ in the

workflow and communications channels. This

allows the company communicate feedback

and lessons to learn. We can develop very fast

and change very fast,” Polomsky claimed.

When it came to vetting, an in-house

vetting inspector is always on board of the

inspected vessels. This move is not only

aimed at assisting the crew during the vetting,

but also one of the major concerns and

obligation to maintain safe operation during

discharge, Polomsky explained. “From the

very beginning,” he said, “safe and quality

operation at the highest standard is our target.”

There are presently 16 people sitting in

Offen Tanker’s office in Hamburg and due the

company being a subsidiary of a major

shipowner/manager, it is using the synergies

for some tasks, such as purchasing. Also for

the Polish officers employed on CP Offen’s

containerships and in the tanker division the

same agency is used.

When the last 52,000 dwt tanker will be

delivered in 2011 the Claus-Peter Offen group

will have built 36 vessels at Hyundai Mipo.

The first tankers ordered were converted

1,800 teu containerships and formed the

milestone for the new tanker activity.

Last year, Offen Tankers took delivery of

eight vessels in roughly seven months and

beside intensive supervision at the building

yard (up to 14 people) the crewing,

purchasing and technical management had to

be put in place very quickly. Operational

assistance with tank cleaning experience was

also needed and was implemented in parallel.

One of the companies highlights and main

focus was and is crew selection, training and

familiarisation. Therefore, an intensive

briefing/training period is held usually taking

the form of a five day session in the office.

Cadets are carried on board the tankers and

Offen Tankers’ employs a training master who

goes from ship-to-ship for hands-on training

and further education.

According to the entrance criteria at Offen

Tankers, all officers and crew should have spent

an adequate number of years serving on similar

tankers. On many trips an extra chief officer

and/or chief engineer is carried. All these efforts

together with the internal promotion scheme are

aimed at accelerating the qualification and

experience of the sea going personal.

Together with partner, Broström, Offen

Tankers has developed an intensive quality

reporting policy for near misses, etc and by

highlighting lessons to be learned, standards

and operational safety can be jointly

improved, Polomsky said.

Offen also runs a small competition to

encourage the seafarers and others to come



Protection of Metallic Surfaces

p2-23:p2-7.qxd 02/10/2009 10:25 Page 15

up with good suggestions for improving

vessel operations.

Last tanker deliveredOne company that has finished its

newbuilding programme is Bremen-based

German Tanker Shipping (GTS).

The last vessel – Seapike - was deliveredfrom the ill-fated Lindenau shipyard in July.

The products tanker differs from her earlier

sisters in that she is 10 m longer giving a

higher total deadweight of 43,000 tonnes,

some 3,000 dwt larger than her near sisters.

Seapike has a complement of 19, which isthe industry standard for this type of vessel.

She is the fifth and largest in a series of five

product tankers of over 40,000 dwt ordered to

a joint Lindenau and GTS design.

The other eight vessels in the GTS fleet are

of 32,250 dwt and were of an earlier vintage.

The first one delivered was the Seadevil in1996 and was the first vessel to be managed

by the newly formed company. She was sold

to Thai interests at the end of 2007.

The larger ships were fitted with an extra

tank for carrying low sulphur fuel oil (lsfo).

Their main propulsion units are Augsburg-

built 4-stroke MAN Diesel 8L58/64 type

medium speed engines, developing 11,200 kW

at up to 428 rev/min. They are connected to

CPPs via reduction gear and the vessels have

also been fitted with Becker flap rudders for

better manoeuvrability.

Chugoku Samwha Paints’ phenolic epoxy

tank coating Epicon T800 was chosen for the

cargo tanks.

All the vessels are operated on the spot

market and are a custom-made design from the

Kiel shipyard. Being a champion of all things

German, the vessels are German built, fly the

German flag, are GL class, while the company

employs around 240 German seafarers and

operates its own training scheme.

GTS owns a mix of KG financed and

wholly owned vessels. Out of the 13 vessels

managed, 11 were financed under the KG

scheme, while the other two are fully owned.

All the vessels are technically operated in-

house using an integrated software

management system, namely GL ShipManager.

The vessels tend to operate at around 10-

15% slow steaming with the normal

operating speed being in the region of 13.5,

or up to 14 knots.

Intermediate ownerAnother Bremen-based shipping company

to have come to the end of its intermediate

newbuilding tanker programme is Harren

& Partner.

Between 2004 and 2009, the management

company took delivery of eight ice class

16,700 dwt chemical/products tankers. All

eight were built at the Jiangnan Shipbuilding

yard in Shanghai.

Four are long term timechartered to Maersk,

while three are in the Marida pool, which is

operated by Womar Holdings – a joint venture

between W-O and Heidmar. The eighth vessel

is currently on the spot market.

Harren & Partner has several other ship

types under management so a team of

superintendents, purchasing officers and

vessel operators tend to be responsible for

each different ship type.

“Our quality measures are paying off,”

Peter Gronwoldt, managing director of Harren

& Partner Ship Management told

TA�KEROperator. “All of our KPIs are inplace. We have our own HSE policy, which is

reflected in all of our masters and chief

engineers familiarisation courses.”

Gronwoldt operates a policy whereby three

superintendents visit the ships each year. On

board training has also been introduced with

trainers rotating between the vessels. They

each visit the head office every 12 months for

an audit. In addition, an internal audit is held

for the entire crew of each ship.

Harren & Partner operates its tankers with a

crew of between 17 and 18. The accommodation

block was built to house 20 seafarers giving

the company room to employ cadets on board

as necessary.

On the bridge, each ship is fitted with a

dual ECDIS and paper charts as back up.

One design innovation is that no pipework

can be found on deck, except for the manifold

connections. All the pipes are contained in the

vessels’ trunks. The tankers’ cargo tanks are

coated with Hempel’s Hempadur 15,500

phenolic epoxy.

Training, planned maintenance, stores and

supplies requisition and other functions are

all integrated into one system. Touch screens

are employed, including the PCs in the

engine room.

The eight tankers are classed with DNV to Ice

Class 1A and fly the Maltese flag. They were

designed to trade in and out of the Baltic during

the winter period, hence the high ice class.

Gronwoldt thought that there will be an

increasing demand for intermediate IMO type

II/III chemical/products tankers and said that

we could see an upturn in the market by 2011.

Hamburg-based poolOne of the major pools operated out of

Hamburg is United Product Tankers (UPT).

Formed in 2003, UPT comprises three pools -



GTS’ Seamullet seen anchored in the Thames estuary, was built in 2001 and is of 32,238 dwt.

p2-23:p2-7.qxd 02/10/2009 10:25 Page 16

1) UPT Handy Pool - looks after products

tankers in the 33,000 dwt to 40,000 dwt

range.

2) UPT Panamax Pool - as the name

suggests, this pool operates LR1s.

3) UPT Coastal Pool - another pool segment

for intermediate tankers of around 13,000

dwt, which was recently set up.

Today, UPT commercially manages vessels

technically operated and owned by interests

connected with Columbia Shipmanagement

(CSM)/Schoeller Holdings, Donnelly Tanker

Management/Hartmann, Conti Reederei,

Koenig & Cie and MPC Capital.

It was originally formed to commercially

handle two tranches of Handysize tankers

ordered by those interests connected with

CSM and Donnelly.

By 2010, when all the newbuildings have

been delivered, UPT expects to commercially

manage 51 vessels. These will include 11

LR1s, 34 Handysize vessels, one MR, plus

five intermediate tankers. All the vessels

have coated cargo tanks and are relatively

shallow draft.

Joint managing directors Stefan Ciegelski

and Flemming Carlsen told TA�KEROperatorthat as the oil majors were becoming larger, so

there was a need to have the necessary scale

to provide an efficient service.

Today, the market is very much driven by

traders involved in arbitrage worldwide, thus

creating the need for a spot market. The

advantages claimed are being able to supply

the increased demand for product

transportation by offering a ship up for a

charter almost anywhere in the world.

By having a critical mass of a certain ship

size, a pool can become more active in the

market and thus gets more exposure than a

small operation, which has less vessels to

play with.

Among the benefits is a lower risk of idle

days and also lowering the ballast days’ ratio,

which leads to better earnings. By delivering

efficiencies, a more environmentally sound

business practice can also be engendered,

UPT thought.

The broking network is used in nine out of

10 fixtures as UPT likes to be kept advised on

all business opportunities. However, the direct

contact route is also used in certain cases as

this is normally quicker than relying on the

broking system, which can become

cumbersome if more than one independent

broker is involved in a chain.

One of UPT’s competitive advantages is

that it comes from a slightly different angle, in

that it was set up by tanker owners. The pools’

growth is controlled by its members’ ability to

order tonnage. “We are not getting tonnage

just for the sake of it,” Ciegelski and Carlsen

said. “There has to be a fit.” By forming

pools, the shipowners/managers have

extended their commercial arms.

In the case of the six ‘KG’ financed Conti

Reederei tankers, these were timechartered to

Product Marine Transport then sub-chartered

to the pool.

As for the Brussels focus on and review of

shipping pools, “this is still on the agenda,”

they said. Here a self-assessment process is

needed as is complete transparency. “Don’t

hide anything,” they warned.

UPT is also active in the newbuilding and

project sectors by which shipowners and



Donnelly’s LR1 Summit America is operating in the United Product Tankers (UPT) pool.

Harren & Partner’s eight chemical/product tankers are all Ice Class for Baltic operations.

p2-23:p2-7.qxd 02/10/2009 10:25 Page 17



financial institutions can tap into the market

and contract expertise provided by the

experienced in-house team.

Newbuildings purchasedBremen based Carl Büttner has purchased

two newbuilding IMO II tankers from TVK-

Shipyard in Izmit/Turkey.

They are of 15,000 dwt with their cargo

tanks coated with MarineLine.

The tankers formed part of a series of

newbuildings, which was started with three

deliveries in 2007 and 2008 respectively.

Büttner’s double hull vessels have modern

inert gas and redundant propulsion systems

fitted. Following the company’s tradition the

new ships are named after butterflies. The first

Levana was delivered in March, while thesecond Lemonia entered the fleet in August.

The company purchased the ships to replace

the 19 year old Hummel, which was sold toSwedish buyers at the end of 2008.

Including the new acquisitions, Büttner’s

fleet consists of 11 chemical/product carriers

of between 13.500 dwt and 24.000 dwt. Three

vessels fly the German flag, whereas the

remainder of the fleet sails under British flag

with a homeport of Gibraltar.

Büttner has also sent three of its vessels to

the Lindenau shipyard for substantial repair

works.

The first vessel – the tanker Aurelia –arrivedat Kiel-Friedrichsort on 27th July. During the

vessels 10 day stay at the shipyard, she was

upgraded to IMO Class II. After the upgrade,

the vessel is allowed to transport biochemical

fuels, as well as most other chemicals.

She was followed by the tanker Libelle,which was built at the shipyard 10 years ago.

After the recurring class works were

completed, the yard Lindenau installed an

inert gas system.

This Autumn, her sistership Hornisse builtby Lindenau in 1998 will also have a nitrogen

aggregate inert gas system installed.

The 15,300 dwt IMO II type Levana joined Karl Büttner’s fleet in March.

TO

p2-23:p2-7.qxd 02/10/2009 10:25 Page 18



Final approval of chemical activesubstances was granted at IMO’sMEPC meeting on 17th July forRWO’s CleanBallast system. Thisapproval was one of four steps needed to

obtain full type approval certificate for ballast

water systems.

As a first step, RWO received the basic

approval of chemical active substances in

October 2006 and subsequently finalised the

land-based type approval in 2007. With the

latest IMO final approval, the ongoing

shipboard type approval is now the last step

required to gain the type approval certificate.

Two of the required tests were recently

completed on board a containership and the

third and last test necessary to complete the

minimum six months shipboard trials was

scheduled to be carried out as

TA�KEROperator went to press. RWO hopes to be issued with the type

approval certificate for its CleanBallast

system by the German administration before

the year end.

CleanBallast is a modular system and the

company claims that its ballast water

treatment system can economically and

reliably remove organisms, sediments and

suspended solids in just two steps:

� First, a DiskFilter system for mechanical separation when taking in ballast water.

� Second, RWO’s advanced EctoSys® disinfection unit, which further reduces the

number of living organisms before

reaching the ballast water tanks.

The EctoSys® disinfection system is used

again when de-ballasting at the destination

port, since organisms can regrow during the

voyage. In this way a disruption-free and

clean water cycle is ensured, from taking in to

pumping out regardless of whether in river,

brackish or seawater.

CleanBallast is a robust, easy to install

and operate ballast water treatment system

for any kind of ship and ballast water

pump capacity. It can easily be implemented

in newbuildings but also retrofitting

programme. The modular design concept

means that it can be configured to suit the

available space on board. It is fully

automated but with the possibility of both

local and remote operation.

The mechanical separation of particles

and organisms is undertaken by a special

disc filtration technology, which enables and

secures a good net ballast water production,

even in the case of high sediment loads. In

the second treatment step, the pre-cleaned

ballast water flows through an advanced

electrolysis (EctoSys®), to eliminate

bacteria and organisms and cleans the

ballast water in an economical and

ecological friendly way. Besides the

system's extremely low need for power it

also stands out for fulfilling its function in

waters with higher salt content, meaning in

sea and brackish water, and especially also

in river water with low salt content,

whereby it differs greatly from standard

chlorine electrolysis.

System deliveriesAs of September, a number of CleanBallast

systems had already been delivered from

the Bremen manufacturing base to shipyards

in China. Marketing of CleanBallast was

well underway during TA�KEROperator’svisit to the Bremen headquarters. Seminars

and exhibitions will form key platforms

for marketing the system. These include

Neva in St Petersburg, INMEX India in

Mumbai, Europort in Rotterdam,

Kormarine in Busan and Marintec China

in Shanghai.

The company has a network of more than

50 qualified sales/service stations

established throughout the world, ensuring

customer benefit from short communication

links and rapid response times. Some of the

sales and service stations will be able to

provide supervision of installation and

commissioning of the systems and training

to the crew.

RWO, part of Veolia Water Solutions &A CleanBallast type approval certificate should be issued by the end of this year.

Bremen-based water and wastewater treatment company RWO was one of the six

companies to receive IMO approval for its ballast water treatment plant recently.

RWO gears up forballast water surge

p2-23:p2-7.qxd 02/10/2009 10:25 Page 19

Technologies, also claims a significant

market penetration for its marine water

treatment plants. About 12,000 of its systems

are installed on world’s fleet and today the

company supplies plants to over 800 vessels

per year. It also is the world leader in oily

water separators and in the process of

gaining type approval for an additional

sewage treatment plant to fulfil the new

regulations in accordance with

MEPC.159(55).

For drinking water on board floating

facilities far from land, such as FPSOs, RWO

can supply a complete reverse osmosis plant

as illustrated on one of the world’s largest –

FPSO Girassol. Located about 150 km off the Angolan

coastline, the oil produced from the block is

serviced partly through the FPSO, which

has a storage capacity of 2 mill tonnes of

oil. Once fitted on board the FPSO

Girassol, RWO’s desalination plant willproduce around 70,000 litres of good quality

drinking water per day. The system has a

very low maintenance threshold, the

company claimed.

RWO produces the full range of water

treatment equipment including waste

water treatment, ballast water treatment,

process water treatment and fresh water

treatment.

To cope with expanding sales, about two

years ago, the company moved to a larger

office and manufacturing site in Bremen. Due

to the expansion, the number of RWO

employees has jumped to around 66 – up

10 from 2008 and double the number of

people in 2006. TO

CleanBallast is claimed to be easy to install and maintain.



� Modular design.

� Can be implemented in new ships as well as retrofits.

� Extremely low power consumption and pressure loss.

� Working in fresh and salt water.

� High ballast production even at high sediment loads.

� �o increase in corrosion or material damage to the vessel.

� Fully automated.

� �o danger for crew or ship and safe for the environment.

CleanBallast –Advantages at a glance

p2-23:p2-7.qxd 02/10/2009 10:26 Page 20

The study focuses on optimising themain cargo area of an Aframaxclass tanker to identify the bestperforming designs in terms ofimproving both environmental protection from

accidental oil outflow and economical

competitiveness.

For the design concept development stage, a

full parametric multi-objective design

optimisation platform was developed by using

genetic algorithms and taking into account

probabilistic oil outflow calculation methods

for side and bottom damages and a structural

design assessment (with corrugated or flat

bulkheads), according to GL’s rules using the

scantling tool POSEIDON.

The resultant Pareto-optimal designs were

evaluated in terms of oil outflow

consequences, structural weight and cargo

capacity, design feasibility, ship

maintainability and ballast water capacity.

A variety of promising Aframax designs

were developed. Compared to a standard

reference Aframax double hull design (6 x 2

cargo tanks), which had been already

optimised by the shipyards, alternative 6 x 2,

6 x 3 and 7 x 2 cargo tank arrangements were

explored, with very promising features, both

in terms of cargo capacity and with respect to

the risk for oil outflow.

Other interesting features of optimised

designs are the increased double bottom

height and reduced size of tanks in the

forward part of the vessel, in direct response

to damage statistics. Therefore, both from the

economy and safety point of view, the

resulting designs appear attractive to the

shipping industry.

The research started within the EU funded

project SAFEDOR (2005-2009), but was later

extended to include structural design issues

through a bilateral GL-NTUA (National

Technical University of Athens) project

(2008-2009).

GL’s Dr Pierre Sames, senior vice president,

strategic research and development explained

that oil tanker design has lately been driven by

shipyard production aspects only. New

Germanischer Lloyd (GL) is working on the development of innovative tanker designs

with optimised characteristics with respect to cargo transport efficiency and

environmental safety issues using a novel holistic tanker design procedure.

Optimisation of tanker design for

efficiency and safety



Economic AnalysisReference design �ew design gain (%)

Tank arrangement 6 x 2 6 x 3 -

Bulkhead type flat flat -

Cargo capacity (cu m) 126,765 135,950 +7.2%

Steel weight (tonnes) 11,077 11,013 -0.6%

Oil outflow index 0.01006 0.00942 -6.4%

The LPG carrierGaschem Nordsee

pushed GL overthe 80 mill gtbarrier of enteredtonnage earlierthis year.

p2-23:p2-7.qxd 02/10/2009 10:26 Page 21



designs only marginally improved economics

and safety, he said.

GL teamed up with NTUA to optimise a

tanker design aimed at efficiency and safety.

Basically, the aim of the study was to

minimise oil outflow in an accident, to

produce less emissions, maximise cargo

volume, minimise lightship weight, offering

lower operating costs by way of fuel and

maintenance.

When developing a parametric model for

the cargo block area, the main geometric

boundary conditions were a fixed hull form,

fixed cargo area length and a double hull

design. Additional constraints were the

SOLAS and MARPOL requirements.

The internal arrangements in the parametric

model were based on one or two longitudinal

bulkheads in the cargo tank area, a variable

number of transverse bulkheads in the same

area, either flat or corrugated bulkheads, while

the inner hull side walls and double bottom

maybe parallel to the centre plane and bottom,

inclined or stepped.

As for the design variables, the parameters

included the layout (either double hull or

segregated ballast tanks), number of tanks

running in a longitudinal direction. Also to

be considered were the number of transverse

cargo tanks, the maximum centre tank width

and the type of bulkhead, either flat or

corrugated.

For each cargo tank, the following variables

were used; -

� Double bottom height.� Double hull clearance, or side tank

breadth.

� Tank length as a fraction of the total cargo space length.

� Purpose of side tank and centre tank (zero-

ballast water, one cargo).

There were also 21 structural design

parameters to be considered.

A structural model was generated using the

software POSEIDON for all the design

variants. The total number of variables was 41

and the total number of designs examined

came in at around 17,000.

Also, five different cargo oil tank design

scenarios were examined, including

arrangements for 6 x 2, 6 x 3 and 7 x 2 cargo

tanks with either flat or corrugated bulkheads.

GL said that the expected changes in

investment included an increase in P/V valves;

tank radars; tank washing equipment;

stripping, inert gas and venting pipes. There

would also be about a 7.5% increase in the

coating area and an increase in the hull

construction costs, due to the sloped double

bottom, but a decrease in the hull’s steel

weight of 0.6%.

Operationally, GL found that the cargo

discharge operation was unchanged, but that

there was an increase in the cost of maintenance

for the extra equipment needed and an increase

in slops from tank washing by about 24.3%.

In addition, there was the possibility of an

increase in time of stripping, depending on the

cargo unloading sequence.

With the classification of the LPG carrierGaschem Nordsee earlier this year, GLpassed the 80 mill gt threshold. More than 6,870 ships are currently surveyed on a regular

basis by GL. As a result, the fleet in service under GL

class has grown by 10 mill gt since September 2007.

The German flag Gaschem �ordsee was delivered inlate March by Meyer shipyard in Papenburg. The

LPG/ethylene tanker is the first of four gas tankers of the

same hull design to be built in Germany and delivered by

2010 by the Meyer shipyard and its sister company

Neptun Shipyard.

Of 13,878 gt, the vessel has a capacity of up to 17,000

cu m of liquefied gas. Besides LPG, the tanker is also

designed for the transport of liquefied ethylene gas (LEG),

used in the petrochemical industry.

She measures 154.95 m in length and 22.70 m in width,

with a maximum depth of 10.60 m and a speed of 17

knots. Gaschem �ordsee is initially being deployed byJapan's Marubeni Group to transport liquefied gas to Asia.

Commercial and technical shipmanagement for the

Gaschem �ordsee is handled jointly by Harpain ReedereiGmbH & Co KG, a joint venture of Harpain Shipping and

Hansa Hamburg Shipping International, and NSB

Niederelbe Schifffahrtsgesellschaft mbH & Co KG.

GL passes a milestone

TO

Economic AnalysisReference �ew Difference

Vessel Design (%)

Cargo capacity (cu m) 126,765 135,950 7.25%

Steel weight (tonnes) 11,077 11,013 -0.58

�ewbuilding costs (mill$) 65 66.95 3.00

Annual capital costs 5.64 5.81 3.01

(20 years, 7%)

Fuel costs ($300 per tonne)* 4.7 4.8 2.13

Other operating costs 2.9 3.03 4.48

(Manning, stores, admin) 2.1 2.1 0.00

(Maintenance and repair) 0.6 0.72 20.00

(Port costs) 0.2 0.21 5.00

Total annual costs 13.24 13.64 3.02

Cargo transported

(mill tonnes per annum) 1.268 1.360 7.25

Cost of transport

($ per tonne) 10.44 10.03 -3.94

*With 7.25% more cargo, an increase of 0.9 m draft is estimated, leadingto a 2% increase in fuel costs at 13 knots.

...oil tanker design has lately been driven

by shipyard production aspects only.

New designs only marginally improved

economics and safety...

“

”

p2-23:p2-7.qxd 02/10/2009 10:26 Page 22

TECHNOLOGY - PROPULSORS


With a multi-, or usually, twin-screw propulsion system, thepropulsion efficiency canbecome higher whencompared to a single screw propulsion system.

To take advantage of this higher propulsive

efficiency the hull should be designed to

account for the two propellers by having a

twin skeg aft body.

The twin skeg is used to direct the boundary

layer from the hull into the propeller, giving

higher hull efficiency as well as higher overall

efficiency, as compared with a single skeg hull

with a twin screw propulsion system.

Comparing a single screw with a twin

screw vessel can be slightly more

complicated but a simple attempt will be

made here. Efficiency is not the only

important factor when discussing single

screw versus twin screw propulsion systems.

Other factors need to be considered, such as

the flexibility of the vessel.

On a vessel with a single propeller the

speed can only be lowered by decreasing the

power from the engine. For a fix pitch

propeller this is performed by lowering the

rate of the propeller’s revolution and for a

controllable pitch it is performed by either

only lowering the pitch, or by combining a

lower pitch with a lower rate of revolution,

called combinatory mode.

When the speed is reduced by using this

method both engine and the propeller are

working in an off design condition and the

overall efficiency of the propulsion system

can be reduced significantly. In a twin screw

propulsion system the speed of the vessel can

be reduced in a different way, by closing one

unit, allowing the remaining propeller to drive

the ship.

The closed unit can be treated in two

different ways. One is to lock the propeller

shaft and the other is to let the propeller rotate

freely. If the propeller shaft is locked, a break

is needed on the shaft line to have it fixed. If

on the other hand the shaft is rotated freely a

clutch is needed to disconnect the propeller

from the engine. This clutch is usually located

on the gear box, or as a shaft clutch, which is

a more complicated exercise.

If the shaft line cannot be locked or

clutched out, it is not possible to propel the

ship and the only possibility to reduce the

speed is to lower the engine (s) power and

allowing both propellers to drive the ship.

Both of these options, locked or clutched out

propeller, are in principle possible to perform

with both fixed pitch (FP) and controllable

pitch (CP) propellers fitted.

There is an advantage with the CP propeller

since the pitch can be adjusted for the lowest

possible resistance. Usually, a CP propeller

has a pitch range from full ahead of about 30

deg, which is somewhat higher than that of a

fix pitch propeller - about -25 deg full astern.

A third alternative also exists and this

occurs when the CP hub allows the feathering

of the blades, that is, the blades can be set at

90 deg pitch being parallel to the flow. Not all

CP hubs have this possibility and only very

few have this possibility included in a

standard hydraulic hub.

Having this CP-propeller, with or without

the possibility to feather the blades, turned off

in a twin screw setup, its highest resistance

would be when the blades are in zero pitch

position, as the projected area becomes the

largest. The lowest resistance will be

discussed further on in this article.

Computational settingsTo investigate the differences of driving the

ship in these alternative configurations, a

principle ship is used. It is a typical ship

where this type of setup could be of interest

and possibly be of use.

It is a 100 m tanker with 3.6 dia propeller

driven by a 3,200 kW power plant. This tanker

has either a single screw propulsion system

with a single skeg aft body, or a twin-screw

propulsion system with twin skeg aft body.

The power, for simplicity as described later,

is produced using two engines each of 1,600

kW. This type of ship would typically have a

maximum speed of 13 kn at 3,200 kW and by

using a simple approximation that the power

relates to the speed as P = k � V4s where inthis case, k ≈ 0.112kW/knot4, this vesselwould run at around 10.9 kn at 1,600 kW.

The computations are only performed for

the propeller not used, the running propeller is

assumed to drive the ship at the correct speed

and is not influencing the simulated propeller.

The blades have a medium skew of about 30

deg and an expanded blade area ratio (EAR)

of about 0.4. The propeller is located in the

wake of the ship and the speed of the water

approaching the propeller is VA = w � Vs. Fora twin skeg tanker hull, such as the example

used here, the wake fraction is assumed to be

w = 0.22 giving VA ≈ 8.5 knots.The computation is performed in open

water using steady Reynolds Averaged Navier

Stokes (RANS) and Multiple Reference Frame

(MRF). The RANS equations are solved using

the open source library OpenFOAM, using a

realisable k-epsilon model and a blended

scheme, using about 80% second order and

20% first order numeric. The mesh is fully

tetrahedral with a prism layer around the wall

boundaries containing about 5 mill cells for

the full propeller.

The y+ value of the first cell is about 100

and consequently a wall handling technique is

used based on the law of the wall. The pitch

of the blades is set in two conditions, one is

Today, many ships are equipped with a single screw propulsion system,

but as the demands on high efficiency, as well as increased flexibility and

redundancy becomes stronger, many designers and shipowners

are looking towards multi-screw propulsion systems*.

The flexibility of twinscrew vessels with various

propulsion concepts

p24-35:p39-50.qxd 02/10/2009 10:31 Page 1


TECHNOLOGY - PROPULSORS

feathered and the other is in the design

condition pitch, corresponding to 80% of full

ahead pitch for a non-feathered hub. Two

computations are made with the propeller

locked, one for each pitch setting and one

with the propeller rotating and the pitch in

design condition. The rotating case is referred

to as self milling condition when the

momentum from the water on the propeller

levels the losses in the shaft l

TAKEROperator · Tel: +44 (0)1304 840009 Fax: +44 (0)1304 840075 Email: [email protected]...

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