Is this ship hazardous waste?

The case of a Marshall Islands LNG carrier held in the UK in August by the Environment Agency (EA) because it was suspected of being bound for a breaking yard in a non-OECD country could be resolved soon.

A spokesman for V.Ships, the managers of the 71,804 gt Margaret Hill told London Matters that talks involving the EA and the flag state have been ongoing and that he hoped a resolution would be achieved with a few weeks.

The detention of the ship has raised a number of issues relating to international law and the recycling of ships. Responding to questions from London Matters, an EA spokesman confirmed that the agency had acted on the basis of the Basel Convention.

In a press statement at the time the ship was stopped from sailing the EA said: “Under international law, anyone intending to send a waste ship from England and Wales abroad for dismantling must first obtain permission from the Environment Agency and our equivalent regulators in the proposed destination country.”

It added: “Waste ships containing hazardous materials can only be dismantled at properly authorised dismantling facilities in either the EU or an Organisation for Economic Co-operation and Development (OECD) country. They cannot be sent to dismantling facilities in countries outside the EU or OECD such as India or Bangladesh.”

The EA confirmed this week that it did not matter that the ship was foreign flagged and that any ship of any state could be stopped in the UK if it was suspected the ship was about to be scrapped. It would appear, for example, that an Indian ship could be detained in a UK port to stop it being broken up at India's Alang beach. It also confirmed that the beneficial ownership of a “waste ship” was irrelevant.

While declining to comment specifically on the Margaret Hill case, an International Chamber of Shipping spokesman said: “Speaking generally, our perspective has been and remains that the Basel Convention was not designed to apply to ships. It was designed to restrict the export of hazardous waste for dumping in non-OECD countries. Interpretations of the convention that ships can be 'waste', which some people are keen to press, don't really work.”

He added: “Internationally there is the Hong Kong Convention 2009 which is fit for the purpose of governing the recycling of ships. We would like to see countries moving quickly to ratify this convention and applying it in their national laws as soon as possible. This would avoid the situation of ships being detained on the basis of a convention not designed to regulate the recycling of ships.”

A comprehensive update on ship recycling issues will be provided at Navigate Event’s Maritime Enviro-Regulatory update with which takes place 14-15 October in London with representatives from the Norwegian Ministry of the Environment, Germanischer Lloyd, Maersk Ship Management and IMO providing practical advice.

An updated version of the Industry Best Management Practices (BMP) against piracy in the Gulf of Aden off Somalia has been released to the shipping industry by 12 relevant international organisations.

Tanker owners' association Intertanko says: “The updated BMP are of particular importance and urgency to reach ship owners/operators/masters/crew before the expected end of the monsoons [at the end of last month], which is likely to correspond with an increase in piracy attacks.”

A number of changes have been incorporated into the new version, based on lessons learned from vessels’ owners/operators, and in cooperation with EUNAVFOR (the EU Naval Forces in the region), and also on improvements regarding communications and reporting.

The BMP updates include weather and registration information; transit corridor systems; additional protective measures; ship manoeuvring recommendations; harmonising piracy reporting and streamlining contact information in the event of an attack.

Ships in lay-up

Shipmanagers should seek legal advice before entering into any contracts with owners relating to the laying-up of vessels, the International Transport Intermediaries Club (ITIC) has told its members. ITIC says there has been a recent sharp increase in the number of lay-up contracts which it has been asked to review. Some of these agreements are based on amended shipmanagement contracts, where the manager acts as agent for and on behalf of the owner. Other agreements involve the manager offering lay-up services to the owner as a principal rather than as agent.

ITIC points out, “Where the manager offers these services as an agent of the owner, it will arrange for the appropriate anchorage to be sourced and also arrange for the maintenance and repair of the vessel. If the manager contracts to actually undertake the maintenance and repair of the vessel itself, the contractual relationship between the owner and the manager changes completely. In those circumstances, the manager is taking on the role of a contractor and therefore may require ship repairers’ liability insurance in the event of damage being caused to the ship by anybody who is actively engaged in its maintenance and repair on behalf of the shipmanager.”

The insurer adds: “Such maintenance and repair insurance is available, but it may be substantially more expensive than existing professional indemnity insurance. As such, shipmanagers should have any lay-up contracts reviewed by their legal advisers prior to making any decisions about the insurance cover they are likely to need.”

The Baltic Exchange has called on the European Commission (EC) not to lose sight of the benefits of over-the-counter (OTC) trading in the freight derivatives market and warns that over-zealous regulation could drive business away from Europe. It has particularly questioned the need for greater regulation and transparency in the OTC sector.

In its response to the EC’s consultation paper Enhancing the Resilience of OTC Derivatives Markets, the Baltic Exchange argues that the freight derivatives market has evolved successfully and in the direction desired by regulators thanks to an evolutionary rather than prescriptive approach.

The freight derivatives market already sees around 90% of all trades cleared and is provided with independent forward pricing and volume data by the Baltic Exchange.

The Baltic warns against a move towards the imposition of exchange traded contracts by regulators, noting that market forces should be allowed to judge when the benefits of exchange or other electronic trading outweigh the benefits of OTC trading.

“OTC markets allow brokers and traders together to evolve contracts which meet their needs. There is considerable natural pressure for standardisation because using a standard instrument reduces liquidity risks and opens up access for example to clearing. It also offers the likelihood of finer pricing in a brokered market since the pricing of a standard contract is more likely to be subject to market-place competition.”

Responding to calls for greater transparency in derivatives markets, the Baltic Exchange writes: “It is unclear why more transparency of trading activity could help instil better due diligence and more efficiency in the markets.”

It adds: “In the commodity markets and specifically the freight market, private unregulated companies transact business with other private companies and often choose to keep this business confidential. Not only are the benefits of greater transparency [of this nature] unclear, they are probably unattainable as other jurisdictions, Switzerland, Singapore etc are attractive alternative locations for market participants. Over-zealous regulatory intervention could easily drive business away from the EU.”

UK marine services company and ship operator James Fisher says “strong organic growth overseas led by the Specialist Technical division more than offset the recessionary issues in the UK”. Total revenue from operations was up 13.9% to £130m during the first half of 2009 while pre-tax profit was up 18.2% to £13.0m.

Company chairman Tim Harris says:

"In the first half strong organic growth overseas led by the Specialist Technical division more than offset the recessionary issues in the UK market. Encouragingly, our nuclear cluster has begun to perform well and the Defence division, unquestionably a world leader in specialist submarine rescue, is beginning to produce good revenue growth. Prospects for both remain promising.”

However the company statement notes:

“Unsurprisingly the recession is not without some adverse effects on the Company, the most significant of which can be summarised as follows. Firstly in the Marine Oil division, James Fisher Everard has suffered from a sharp drop in volumes carried which has reduced its profitability to breakeven in the first half.”

London will be the venue for the WISTA International 2009 conference, which is celebrating 35 years since its founding by a group of City brokers and traders of the Women’s International Shipping & Trading Association.

WISTA has put together a comprehensive programme analysing all the main maritime topics of the hour – from safety to piracy to seafarer criminalisation to communications to the impact of the financial crisis.

The London maritime community is receiving a general invitation to the opening ceremonies at IMO headquarters on 16 September.

Registration continues to be available for the three day conference as a whole and its social events, including the gala dinner at the close on 18 September. WISTA today has well over 1,000 members in 27 countries from the maritime and associated professions.

See www.wistaconference.org for details.

The UK’s Merchant Navy Training Board (MNTB) is launching its Careers at Sea Ambassadors scheme across Great Britain this autumn and is looking for keen and enthusiastic professionals from across the shipping industry to volunteer and help to inspire the next generation of seafarers.

The MNTB launched a pilot project at the beginning of 2009, equipping six ‘Ambassadors’ with a range of specialist resources and organising visits to schools, colleges and youth groups to talk about the exciting and varied career opportunities available in the Merchant Navy. The MNTB now is looking for many more volunteers to take part and is particularly interested to hear from third year trainee officers and newly qualified officers to give a good picture of their training and share early experiences at sea.

According to the MNTB, candidates should ideally have their own links with schools, colleges or youth groups and be keen to promote the excellent career opportunities within the Merchant Navy in their own local area. They will be expected to organise and arrange around two or three of their own visits a year. New Ambassadors will receive a half day training session covering all of the up to date information on entry routes, the different officer training programmes as well as top tips on speaking to young people, teachers and career advisers. They will also be given a range of professional presentation resources including video clips and quizzes that can be used in a variety of different settings to engage and inspire young people.

For further information contact Beth Richmond on 020 7417 2825 or e-mail beth.richmond@mntb.org.uk