Costa Concordia

The Friday 13 January grounding and capsize of the Costa Concordia came only days before IMO had planned to mark the 100th anniversary of the sinking of the Titanic in an initiative to refocus on safety of life at sea.

IMO Secretary-General Koji Sekimizu postponed last week's planned launch of the 2012 World Maritime Day theme “IMO: One hundred years after the Titanic” as a mark of respect. Speaking at the opening of the IMO Sub-Committee on Stability, Load Lines and Fishing Vessel Safety he said, “I wish to express my sincere condolences and sympathy on behalf of IMO to the families of those who have lost their lives the cruise ship Costa Concordia.”

He praised the rescue operation saying: “Further, I appreciate the Italian Coast Guard for their rescue operations over the night of the accident and the continued efforts deploying patrol boats, tugs, helicopters as well as diver teams, which have resulted in the highest number of people rescued in the history of the Italian Coast Guard.”

He then offered advice that has been widely disregarded. He cautioned: “Causes of this accident are still not yet established. We must wait for the casualty investigation and should not pre-judge or speculate at this stage. I would like to urge the flag state administration to carry out the casualty investigation covering all aspects of this accident and provide the findings to the IMO under the provisions of SOLAS as soon as possible.”

He added: “IMO must not take this accident lightly. We should seriously consider the lessons to be learnt and, if necessary, re-examine the regulations on the safety of large passenger ships in the light of the findings of the casualty investigation. In the centenary year of the Titanic, we have once again been reminded of the risks involved in maritime activities.”

In a similar vein Maritime London member Nautilus International has warned that the rush to judge the actions of the master and crew before a proper investigation into the grounding of the Italian-flagged cruiseship Costa Concordia, may obscure serious and profound safety lessons.

The seafarers' union's general secretary Mark Dickinson, said while the union was shocked and saddened at the tragic incident and loss of life, it was also extremely disturbed to see the rush to judgement over the action of the crew – and the master in particular.

“It is highly regrettable that the master is being singled out for blame before the results of the maritime and criminal investigations are available,” he said. “In this the centenary year of the loss of Titanic, there is a danger that just blaming individuals will obscure the serious and profound safety lessons that may need to be learned, as well as the matter of justice and a right to a fair trial.”

Nautilus senior national secretary, Allan Graveson, said “We should not just look at narrowness of human error, but do a full scientific investigation and apply any lessons to future ship building and operation. We have moved to economy of scale. There is nothing wrong with that, we do need a sustainable and vibrant cruise industry. There are many good ships being operated extremely well, but there are some elements that do need to improve.”

Nautilus said it has been expressing concern for a number of years about the operation, construction, design of cruise ships – some of which have doubled in size in the last 10 years. The technology of evacuation likewise needed looking at because of the “acknowledged shortcomings of lifeboats and liferafts”.

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Andrew Chamberlain

Just days before the Costa Concordia disaster the shipping industry had been warned by a leading maritime lawyer that it might soon face its “Deepwater Horizon moment”.

Speaking at a Maritime London lunchtime function on 11 January Holman Fenwick Willan partner Andrew Chamberlain actually had a mega containership casualty in mind. But much of what he said resonated with the aftermath of the cruiseship's grounding and capsize with probable loss of life in excess of 30.

“The industry is facing the perfect storm,” he said. “We have a global recession, high cargo values (relative to ship values), ever larger and untested ships, environmental concerns and increasing public and government awareness of the impact of shipping incidents. Since the Napoli in 2007 any marine casualty is much more likely to be on the front page of every newspaper.” He said that the consequences of a serious incident involving one of the larger containerships “may well result in a complete change in the accepted liability regimes and even the traditionally accepted insurance arrangements for such large vessels.”

According to Mr Chamberlain, recent high profile container ship casualties have involved relatively small vessels capable of carrying up to 4,688 containers, as with the MSC Napoli. The Rena, which is currently breaking up off the coast of New Zealand, has a capacity of 3,352 containers. By comparison, the largest vessels sailing today are carrying over 15,000 boxes.

He told the audience of salvors, insurers, shipowners and other maritime professionals that in the event of the loss of the largest class of containership, the epic scale of the incident would mean that the salvage industry would struggle to deal with the removal of the containers and wreckage. He warned that the salvage industry had limited and ageing resources, was increasingly risk averse and today consisted of only around four or five companies with a genuine global capability.

He noted that the legal environment for dealing with these types of incidents was becoming increasingly demanding with rising claims, disproportionately high clean-up costs and the near impossibility of disposing or recycling of a wreck thanks to the restrictive legal regime now imposed by the 1996 Protocol to the London Dumping Convention and the OSPAR Convention, combined with the absence of suitable recycling facilities.

In the case of the Costa Concordia, owned by Carnival Corporation subsidiary Costa Crociere the Standard Club is the lead P&I insurer. In statement it said: “As well as supporting our member, we are giving the authorities full assistance in their response to the incident.” In an unusual arrangement, cruising giant Carnival enters its ships jointly with Standard Club and Steamship Mutual.

Standard Club said: “The Standard Club and the other insuring club will jointly share the first insured $8m of this loss, above which the claim is reinsured through the IG’s pooling system and reinsurance programme with the London and international reinsurance markets.

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Following an independent review by a panel comprising Maritime London, Chamber of Shipping, Harwich Haven Authority, Nautilus, Maritime Skills Alliance and Wirral Metropolitan College, the UK government has announced that it will continue to fund maritime training. The Minister for Shipping Mike Penning said that the government would provide £12m to support initial training for cadets studying at junior officer level with the remainder supporting ratings training and ratings to officer conversion training.

In a written statement the Minister said:

"I have concluded that continuing Government support for maritime training is required. The consultants’ findings, accepted by the independent panel, were that there was a good value for money case for the retention of Government funding. Evidence was presented to me showing that for each working year of a seafarer who has benefitted from Government funding, approximately £14,500 in additional output is created relative to that of a UK worker displaying average productivity."

Full details can be found at bit.ly/zFfqXE

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While shipping is going to need a great deal of resilience to meet the challenges of the next twelve months, for those who can secure funding there have been few better times to invest, according to according to international shipping accountant and adviser, Moore Stephens.

Julian Wilkinson, head of the Moore Stephens Shipping Industry Group, says, “More than ever, shipping will be an industry for long-term players. Operating costs increased in 2011, while the global economic climate deteriorated at a rate outpaced only by the growth of sovereign debt in some euro zone countries.”

He says that the markets are languishing, and are likely to fall further. Also, for the first time in a long while, some of the big tanker-owning companies have come under financial pressure. More owners and operators are likely, Mr Wilkinson believes to seek to renegotiate agreements with their financiers or with the yards building their ships, or both.

“And,” he says, “we can expect finance costs to increase, along with operating costs. Overtonnaging, meanwhile, remains the spectre at the feast, were there a feast to enjoy.”

Nevertheless he notes: “Shipping’s glass is still, remarkably, more half-full than half-empty. Many owners, managers and charterers are reasonably confident of making a major new investment or development in 2012. And the underlying global nature of shipping continues to work in its favour. Given the choice between a domestic retail business in Kolonaki and a shipping business on Akti Miaouli, most would opt for the latter.”

“Shipping may not turn the corner in 2012,” he says. “Nobody yet knows where the corner is. Wider political and economic developments, as always, will play a part. It is said that there is nothing so admirable in politics as a short memory. In shipping, those who can remember the past and have a plan for the future will be the ones who fare best.” The accountant expects to see government intervention in 2012 to rescue ailing yards, “at least on the part of those governments still in a position, financially, to intervene”.

Mr Wilkinson says that “impairment” is likely to become a more familiar term in shipping circles, along with “‘Chapter 11”. The hand of government will also be evident in the tax affairs of the shipping industry. The UK has promised to consult on tonnage tax, which could restore permanently some of the benefits lost in the 2009 reinterpretation of the rules. And the European Commission should commence its review of tonnage tax regimes in EU countries.

“Meanwhile, demand for seaborne trade continues. Even if there is not enough work for all the new ships, we are seeing the emergence of a younger, more environmentally friendly fleet. There is also evidence of some rationalisation of competition which should feed through to better rates."

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In its interim management statement covering the period since the announcement of interim results in October Braemar Shipping Services says activity in its shipbroking division has increased.

According to the company, the markets are entering a new phase where principals are adjusting their operations to fit market conditions. The Group says it has seen “good levels” of spot chartering business particularly in deep sea tankers and in capesize bulk carriers. The specialised tanker chartering desks are also performing well, having secured long term contract business and good prospects of increasing their transaction volumes in the new financial year, beginning 1 March.

Braemar reported that its second hand sale and purchase and demolition business had been more active than in the summer, stimulated by the fall in the value of middle-aged ships in most sectors.

Braemar also says it is making good progress in bringing its technical businesses together as a single unit, trading as Braemar Technical Services.

The company also says its logistics division has been performing well while “ship agency is making substantial inroads in the highly-competitive UK market and continues to grow in Singapore”.

The freight and project forwarding arm is “continuing to expand its customer base and is delivering improved results”.

The cruise ship agency and tours business had a “reasonable summer” in 2011 and bookings for 2012 have been strong on the back of the London Olympics.

Meanwhile Braemar's environmental division, which specialises in dealing with oil, chemical and marine pollution incidents, has been engaged in the salvage, processing and cleaning of the containers from the vessel Rena which ran aground off New Zealand in October 2011. The Braemar team is made up of personnel from the Environmental and Technical divisions who fulfilled a similar role in respect of the MSC Napoli off the coast of Devon in 2007.

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The Isle of Man Ship Registry, one of the world’s leading ship registries and a Maritime London member has just announced record tonnage for the year ending 2011. Year on year comparison shows a 12% increase in total gross tonnage, to13.84m. The increased tonnage puts IoM among the top 15 ship registries in the world.

A statement says: “This demonstrates significant growth in the larger types of vessels registering, given that the register topped 10m gt for the first time in its history in April 2009. The area which saw a particularly rapid take-up rate was the Asia Pacific region, notably Japanese and Singapore-based corporations, who are now more cognisant of the flag’s value.”

The Registry's director, Dick Welsh, said: “The growth in numbers shows that we are well placed to provide a more cost-effective solution for registration without any compromise in quality or service for ship operators and owners. Having just recovered from the global crisis of 2008, ship owners are bracing themselves for another rocky year in 2012. An oversupply of ships together with the global economic downturn is keeping freight rates down and making it difficult to keep vessels operating profitably in many sectors.”

He went on to say: “The uptake on the flag registration has been encouraging. We are seeing an increased level of enquiries for vessels under construction or in-service which are planning to register, or change to Isle of Man registration. This hopefully will translate to an increased level of activities for us over the next 2-3 years especially across the Asia Pacific region.’

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The UK P&I Club has launched an innovative risk management scheme utilising a “BowTie” approach to identifying areas of risk and minimising the occurrence of incidents.

The Club’s loss prevention director, Karl Lumbers, explains: “Working with those members who wish to identify the various threats to the smooth (claim-free) running of their vessels, we conduct reviews on those areas which may cause claims.

Thomas Miller P&I Ltd, the manager of the UK Club, has access to an incomparable amount of claims data resulting from extensive analysis of previous incidents over a period of 23 years and it is this that has enabled the Club to identify ‘threats’, ‘consequences’ and ‘controls’, the foundations of developing BowTie reports on individual vessels.”

The club gave as an example a panamax bulk carrier where five ‘hazards’ were selected as being the most frequent liability claim areas seen by the club.

These were:

• Crew hazardous activities – personal injury;
• Carriage of cargo by sea – cargo damage;
• Ship in transit – collision/grounding damage;
• Ship/crew actions – third party property damage;
• Carriage of pollutants by sea – pollution damage.

Following an extensive on-board survey,’threats’ relating to all five hazards were assessed, ‘controls’ that needed attention were identified and recommendations for changes in working practices were proposed to the master and owner/manager.

According to Mr Lumbers, the UK Club has been analysing claims over a period of 23 years, and has identified seven primary risk hazards; 76 common threats, which if not contained could cause an incident; and 450 controls which need to be in place and effective if the threats are to be contained.

He says: “Although sixty per cent of UK Club claims are caused by ‘human error’, human error is often only ‘the straw that breaks the camel’s back’ – the last event in a chain of causal events. These causal events can normally be traced back to failures in one or more areas of ship operation; we sometimes refer to them as “accidents waiting to happen”. How can we reduce the frequency of these “accidents waiting to happen”? What controls should we be looking at to ensure the threat is contained and an incident does not occur?”

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Lloyd’s Register has supervised the design appraisal, build and sea trials of a new, modified 57,000 dwt ship based on a SDARI design and has verified 14% fuel savings.

The Aquila, first in a new series of supramax bulk carrier designs, optimised to burn less fuel oil has been delivered in China on the eve of the Lunar New Year holidays.

The efficiency improvements have been achieved by carrying out a number of straightforward – but effective – changes including: de-rating the main engine, a new propeller design which has been optimised for the de-rated engine, and fitting a mewis duct.

The daily main engine consumption at a speed of 14 knots at ballast draft, which would have been about 29.4 tonnes, is now about 26 tonnes and the daily main engine consumption at a speed of 13.5 knots at design draft, which would have been about 29.8 tonnes daily, is now about 26.30 tonnes.

The engine’s output has been reduced by nearly 1,000 KW to 8,500 KW.

Ship designers SDARI said that the structure of this new type BC57K has been, “optimised, satisfying the latest requirements in the Common Structural Rules for bulk carriers, especially to accommodate the severe strength requirement of steel coils. The new ship will be able to load about 54,000 tonnes of steel coils during one voyage with little increase of light weight. Now, the vessel also meets the requirements of EEDI-PHASE I.”

Nick Brown, LR’s area general manager and marine manager, Greater China, said: “Owners and operators are looking for efficiencies and now shipyards and designers are responding to this demand. Emissions regulation and higher energy prices are the two leading factors changing our industry. New technologies and innovation will play a vital role in the immediate and long term future of shipping. New fuels, new engines and new designs are becoming available. The difficulty for shipowners, builders, equipment makers and, don’t forget, financiers is not only what technology to support but when to invest. At Lloyd’s Register we have a key role to play in helping the industry appraise designs as well as verifying and measuring performance to help support the decision making process.”

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Maritime London members in Turkey

Maritime London undertook a successful promotional trip in Turkey last week, accompanying the Lord Mayor of London to Istanbul.

The delegation attended a British Chamber of Commerce of Turkey networking reception on the evening of 16th Jan and the next day, Lloyd's Register hosted a high level roundtable breakfast meeting which was attended by senior members of the Turkish Chamber of Shipping. This was followed by a panel session to promote the maritime services of the UK. The session was opened by the President of the Turkish Chamber of Shipping, Metin Kalkavan who gave a warm speech of welcome. The Lord Mayor responded before departing for a meeting with President Gül in Ankara.

The panel consisting of Alex Macintosh of Clyde & Co, David Peel of RightShip, Murat Ileri of Marsh Marine Practice, Maria Borg Barthet of Campbell Johnston Clark LLP and Tony Field of Lloyd's Register covered a range of topics including the environment, regulation and the human aspects of piracy.

Maritime London chief executive Doug Barrow said: "This was a very useful trip for our members and audience participation led to an interesting session which could have gone on much longer. Our thanks to the Consulate General, Jessica Hands, for allowing us to hold this event in Pera House and to the UKTI team who helped organise the event."

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The London Maritime Arbitrators Association (LMAA) has published revised Terms and Procedures, effective from 1 January 2012. The revisions have been made by a committee of experienced arbitrators under the chairmanship of Anthony Hallgarten Q.C.

According to the LMAA, the changes are a response to proposals received from users and arbitrators since the last revisions in 2006 and 2009 and are designed to ensure that the Association's procedures are maintained in line with current and best practice to ensure an efficient resolution of disputes referred to LMAA arbitration in London, which continues to be the leading venue for resolution of maritime disputes internationally.

Details and commentaries can be found at www.lmaa.org.uk

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London plays host to numerous specialist maritime training courses throughout the year. Here is a selection of a few coming up:

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