Lloy'd List The Future of Shipping

The future of shipping since 1734
Sponsored by
Future performance
depends on
todays decisions
We help you make the decisions that ensure your ships
are designed and operated to perform better in every
way, from the fuel they consume to the technologies
and procedures they employ.
Whatever technologies or solutions youre exploring,
were here to help you make the best and safest
decisions.
Discover more at
www.lr.org/performance
Working together
for a safer world
Lloyds Register and variants of it are trading names of Lloyds Register Group Limited, its subsidiaries and affiliates.
Copyright Lloyds Register Group Limited 2014. A member of the Lloyds Register group.
Innovation drawn
from our heritage
Our new logo is inspired by the LR
stamp the true brand that our
surveyors have stamped into steel as
proof of approval since 1884. It is a logo
drawn from our heritage, designed for
the digital age.
The new brand identity is only the
beginning and we are looking forward
to the journey ahead - for both our
clients and our brand.
Lloyds List:
The future of shipping since 1734
Sponsored by
16:01:04
P1-22_INTRO.indd 1
29/01/2014 17:10
Lloyds List
(a trading division of Informa UK Ltd)
Registered in England and Wales number 1072954
Registered Office:
3741 Mortimer Street
London W1T 3JH
an Informa business
2013, Informa UK Ltd
Lloyds List website: www.lloydslist.com
Informa website: www.informa.com
Reprinted material is quoted with permission. Although every effort has been made
to ensure that all owners of copyright material have been acknowledged in this publication,
we would be glad to acknowledge in subsequent reprints or editions any omissions brought to our
attention. All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording
or otherwise, without the prior permission of Lloyds List. This edition published by Lloyds List. For
reprints and permissions contact Lloyds List.
Product or corporate names may be trademarks or registered trademarks and are used only for
identification and explanation without intent to infringe. This book contains information from reputable
sources, and although reasonable efforts have been made to publish accurate information, the
publisher makes no warranties (either express or implied) as to the accuracy or fitness for a particular
purpose of the information or advice contained herein. The publisher wishes to make it clear that any
views or opinions expressed in this book by individual authors or contributors are their personal views
and opinions and do not necessarily reflect the views/opinions of the publisher.
Lloyds and the Lloyds crest is the registered trade mark of the Society incorporated by the Lloyds Act
1871 by the name of Lloyds.
P1-22_INTRO.indd 2
29/01/2014 17:10
Acknowledgements
Picture credits
The assistance of the following organisations and individuals is gratefully acknowledged:
ABS; Baltic Exchange; Bernard Schulte Shipmanagement; Corporation of Lloyds; E&Y; GMS;
Guildhall Library, gCaptain; Hapag Lloyd; Holman Fenwick Wilan; Ince & Co; International
Chamber of Shipping; Inmarsat; International Union of Marine Insurance; Keppel; Lloyds
Register; Ludwig Institute for Cancer Research; Maersk Line; Martin Stopford; Michael
Grey; Mission to Seafarers; National Maritime Museum; Protection Group International;
VesselsValue.com; Womens International Shipping & Trading Association.
Publisher: Nicola Whyke

Managing editor: James Baker
Picture Researcher: Melissa Birkett
Printed and bound by CPI colour
Lead Sponsor
Associate Sponsors
Intelligence. Risk Mitigation.
Response. Consultancy.
Main Tel: +44 (0) 207 887 2699

Email: enquiries@pgitl.com | Website: www.pgitl.com
0253_17-10_PGI Advert A4_Without Address_AW.indd 1
P1-22_INTRO.indd 3
25/11/2013 12:02
30/01/2014 14:05
CONTENTS
Contents
Foreword Koji Sekimizu, secretary-general, IMO
Preface Frank Coles, president, Inmarsat
INTRODUCTION
From coffee house to internet caf Richard Meade
Lloyds List Timeline
Shipping markets, cycles and maritime information 1734-2013 Martin Stopford
11
Old versus new, part one Jim Davis
19
Old versus new, part two Birgit M Liodden
21
PEOPLE
Hail to the good owner and the seafarer Richard Meade
24
Manning problems some things never change Michael Grey
29
The Flying Angel story Dr Ken Peters
33
The generation game Richard Meade
35
Advising the next generation Dr Sadam Kaptanoglu
37
The top 10 most influential people in shipping
41
Ten steps towards a better industry Roberto Giorgi
46
Everything must change to stay the same Richard Sadler
48
The secret of success in shipping Harry Vafias
49
WISTA-UK: a journey of four decades Maria Dixon
50
Greeks long voyage to blue-chip status Nigel Lowry
52
TRADE
Young at heart Siiam Kallas
58
From East to West and back Liz McMahon
60
Changing times Roger Hailey
63
Shipmanagement and the quest for quality Tom Leander
67
For China shipping, a generational shift Tom Leander
71
Containers and global trade Maersk Line
75
TEU the one true global standard Janet Porter
77
Containers and trade Damian Brett
79
iv
P1-22_INTRO.indd 4
www.lloydslist.com
04/02/2014 16:25
contents
More than a commodity Flemming R Jacobs
83
turning threats to opportunity Katharina stanzel
84
A big crisis leads to big reforms Li shaode
85
Unusual definitions the Institute of chartered shipbrokers
87
trading places Jeremy Penn
89
tracking the historic rise of Asian shipping tom Leander
90
coMMUnIcAtIon At seA | sponsored by Inmarsat

the predictable revolution, the demand for certainty craig eason
100
todays young seafarers expect social media access at sea Peter Hinchliffe
108
InnoVAtIon & tecHnoLoGY | sponsored by ABS

ABs safeHull: a legacy in maritime safety todd Grove
111
the role of class in the future Liz McMahon and craig eason
113
the top 10 innovations to influence shipping craig eason
116
Welded freighters that succeeded in war and peace nigel Lowry
120
A class apart Dimitris Melissanidis
122
enVIRonMent | sponsored by GMs

the evolution of recycling Dr Anil sharma
125
strength and Diversity Felicity Landon
127
shipping, the environment and sustainability craig eason
130
Aspire and achieve Rakesh Khetan (Billu)
132
Five must-haves for the future - Dr Grahaeme Henderson
136
Future Proof shipping
138
sHIPYARDs | sponsored by Keppel

synergy and Ambition tom Leander
142
RIsK & InsURAnce | sponsored by Holman Fenwick Willan

Laws of the sea Felicity Landon
151
Bigger ships, bigger risks Liz McMahon
154
Insurance is the lifeblood of shipping simon stonehouse
157
www.lloydslist.com
P1-22_INTRO.indd 5
04/02/2014 11:36
contents
Managing risk Michael Kingston
161
twenty-first century law firm with Victorian roots David osler
164
casualties christopher Munro
168
shipping at the crossroads: many pressing questions awaiting an answer Janusz Fedorowicz
170
Lloyds List: the ability to adapt Dr Richard Ward
172
Insurance timeline
173
secURItY | sponsored by Protection Group International

A history of piracy: how has it changed over the years? Liz McMahon
176
cyber risks are growing Liz McMahon
179
the changing face of security Liz McMahon
182
FInAnce
the future of ship finance and analytics Richard Rivlin
186
the changing face of finance Prof costas Grammenos
189
A life in shipping Jeffrey sterling
192
the future of ship finance Alex McInnes
194
ten mantras for of the secret of success and sustainability in shipping Ravi K Mehrotra
197
Audit is the platform for eY Greece David osler
199
shipowning: out with the old, in with the new but for how long? Michael tusiani
202
capital markets and their transformation nicholas Bornozis
204
Accelerating change Harry theochari
205
Meet tHe teAM
206
cLAssIFIeDs
211
vi
P1-22_INTRO.indd 6
www.lloydslist.com
30/01/2014 14:06
Foreword
Making globalisation a positive force
By Koji Sekimizu, secretary-general,

International Maritime Organization
N modern times, proximity to raw materials and to

markets have been the factors that, above all others,
shaped the worlds economy and, in particular, the major
trade patterns and shipping routes. Today, technological
advances, primarily in communication and transport, are
overcoming the barriers of time and distance and bringing
people closer together, in every sense of the expression,
than ever before.
But the benefits of this so-called globalisation have
been spread unevenly and the gap between the richer and
the poorer nations of the world remains a formidable one.
The United Nations, of which the International Maritime
Organization is the specialised agency with responsibility
for safety, security and the environmental impact of
shipping, is engaged in efforts to ensure that globalisation
becomes a positive force for all the worlds people, and not
just a privileged few.
Maritime activity has a key role to play in achieving this
objective. It provides an important source of invisible income
to many developing countries. Indeed, developing countries
now lead the world in some of shippings most important
ancillary businesses, including the registration of ships,
the supply of sea-going manpower and ship recycling. They
also play a significant part in shipowning and operating,
shipbuilding and repair and port services, among others.
SUSTAINABILITY
There is widespread agreement that mankinds future
development must be sustainable. Shipping, and the maritime
industry as a whole, clearly have a key role to play in spreading
the benefits of globalisation among the developing countries.
But, seen in a wider context, shipping has an even more
important role to play in achieving sustainable global growth.
Sea transport remains by far the most cost-effective and
environment-friendly way to move goods and raw materials in
quantity around the world and the vast majority of global trade
will continue to be carried in ships for the foreseeable future.
Today, shipping and ports cannot be seen in isolation.
They are essential components of a worldwide international
P1-22_INTRO.indd 1
International Maritime Organization secretary-general

Koji Sekimizu
transportation system. The structure of the global

marketplace requires that goods and materials be delivered
not only to the geographical location where they are
required but also within a very precise time frame. The
days of large stockpiles and bulging warehouses have all but
disappeared. Today, goods in transit are carefully factored
into the supply chain and, as a result, the transportation
industry has become a key component of a manufacturing
sector which now sets its store by providing a complete
door-to-door service.
This is having a major impact on the transport industry
as a whole, and shipping is being swept up in the tide. The
door to door philosophy has transformed many shipping
lines into multi-modal logistics organisations. It is not
29/01/2014 12:37
The history of the world is one of exploration, conquest and trade by sea
unusual to see shipping companies investing in their own

dedicated port facilities, rail facilities and trucking fleets
and, for such companies, port operations and inland
transport represent a sizeable proportion of their business
often outweighing the purely shipping activities in which
they have their roots.
LOOKING TO THE FUTURE

The linkage between the development of shore side and
hinterland infrastructure and that of the strictly maritime
sector is set to become even stronger, driven in no small
measure by the increasing momentum behind the need to
achieve sustainability as we move forward.
Looking to the future, shipping must adapt to serve a
global population that is already beyond the 7bn mark and
growing at an unprecedented rate. Estimates say it will
pass 8bn by 2025, and that a very large proportion of that
population will live in cities, and in coastal areas.
The challenges presented by, for example, the opening up
of Arctic waters; the increasing demand for special purpose
ships for offshore construction; the march of oil and gas
exploration into ever more inhospitable areas; as well as
the need for innovative design solutions to meet regulatory
imperatives such as the requirement for reduced emissions,
ballast water management and safe recycling, make these
exciting times for shipping. The industry has always thrived
on innovation, and today there is a great willingness to
consider alternatives to conventional solutions.
A GLOBAL SOCIETY
The ships of the future must be able to meet clear goals
and functional requirements to fulfil the safety and,
increasingly, the environmental expectations of society,
P1-22_INTRO.indd 2
The challenges presented by, for

example, the opening up of Arctic waters;
the increasing demand for special purpose
ships for offshore construction; the
march of oil and gas exploration into ever
more inhospitable areas; as well as the
need for innovative design solutions to
meet regulatory imperatives such as the
requirement for reduced emissions, ballast
water management and safe recycling,
make these exciting times for shipping.
which are growing ever more demanding. The ships of the
future must provide a continuous response to the needs of
society, industry and global trade and be operated within
a framework that encourages a safety culture beyond mere
compliance with statutory requirements.
Today, we may live in a global society, but international
trade among all the nations and regions of the world is
nothing new. The history of the world is one of exploration,
conquest and trade by sea.
Since 1734, that history has been documented on a daily
basis in the pages of Lloyds List, and I wish the publication
every success as it follows in IMOs direction we are
now running Papersmart meetings and makes a full and
complete transformation into the digital age. n
29/01/2014 12:37
Embracing change for 280 years

Lloyds Lists heritage stands proud as it moves from print to digital
By Frank Coles, president, Inmarsat Maritime
OR 280 years, Lloyds List has been the publication

of record for the maritime industry. In 1734, the List
served the needs of Britains emerging mercantile fleet,
offering a vital source of reputable intelligence to ship
owners, investors and insurers. As global trade expanded,
the List followed course, growing in scope and reach, while
always remaining focused on the core requirements of its
customers.
Today, the List is an indispensable source of information
for anyone working in or serving the global shipping
industry. It retains a single-minded vision of its purpose and
is never afraid to adapt to a changing world.
As we mark the final printed edition of

the List and the publication migrates
fully to an online environment, we can
all draw lessons from this outstanding
success story.
SHAREd vALUE
These are values which resonate strongly with Inmarsat and
we are delighted and proud to sponsor this commemorative
publication.
As we mark the final printed edition of the List and the
publication migrates fully to an online environment, we can
all draw lessons from this outstanding success story.
Honouring your heritage, preserving your mission and
embracing the benefits of new technologies; these are
not just admirable qualities, they are essential attributes
for any organisation which seeks to serve the needs of its
customers.
CHANGING TO STAY THE SAmE
The evolving communication of information is critical to both

Lloyds List and Inmarsat
P1-22_INTRO.indd 3
Like Lloyds List, Inmarsat is committed to the maritime

industry. As we continually expand the scale and scope of
our satellite communication services, we retain our maritime
heritage our mission to keep mariners safe at sea while
embracing changing.
It is perhaps fitting that 2014 is a game-changing
year for both our organisations. As the List ports all of
its services into the digital arena, Inmarsat launches a
powerful new constellation Global Xpress to ensure
high speed internet access for the worlds 21st century
mercantile fleet.
We send our heartfelt congratulations to the List, its
readers and contributors.n
29/01/2014 12:37
SAF_02_LL_FP.pdf
2013/12/18
4:13 PM
CM
MY
CY
CMY
P1-22_INTRO.indd 4
29/01/2014 12:37
introduction
From coffee house to internet cafe

Lloyds List has recorded nearly 300 years of change in shipping and is now moving with the times again
By Richard Meade, editor, Lloyds List
WO hundred and seventy nine years is a blink of an

eye in shipping.
In important ways, the information needs in
shipping have remained the same. You need
verified facts to make decisions, with quick access
required. And you need to keep an eye on what everyone
else is doing.
But in that timespan in fact, only in the portion
of it comprising the last 25 years we have seen an
extraordinary revolution in communications.
We get instant feeds of ship positions anywhere in the
world and mobile phone snapshots of casualties as they
happen.
We can know when a vessel is evading sanctions; when
very large crude carriers are frequenting new corners of
the oceans as tonne mile advantage shifts; see how piracy
has altered shipping routes; gain quick knowledge of
rates shifts; and gauge how many vessels a port strike has
turned away. We can use all of this to put together the even
more valuable long-term picture, interpreting the signals
in the information and their bearing on strategy.
WEB PROXImITY
Information is power in shipping - it always has been.
Our founder Edward Lloyd recognised that back in the
late 17th century when he first started publishing a weekly
newsletter and we believe he would not have thought twice
about decision to introduce Lloyds List in an all-digital
form.
Indeed the principles of Lloyd and his famous coffee
shop translate into the digital world of today rather nicely.
The entrepreneurial Lloyd would perhaps have seen the
commercial advantage to shipowners of the internet long
before it struck journalists or media companies.
One reason: the web provides a kind of proximity that
paper can never manage. It takes time to get an edition to
the printing house, and while those presses groan, new
www.lloydslist.com
P1-22_INTRO.indd 5
As it happens, the digital world has

allowed information users to leapfrog
the asymmetry and return to the kind
of proximity offered by Lloyd and his
coffee shop, where a community of
like minded practitioners clustered in
search of the information that would
make or save them money.
developments emerge that can change the character of the

information. The physical world moves slowly: editions hit
the trucks, fans out on city streets, head for airport, bound
for all points. Readers obtain them by delay, influenced by
accidents of weather, distance, and transportation.
This leads to what is known in economic circles as
asymmetry of information. As it happens, the digital world
has allowed information users to leapfrog the asymmetry
and return to the kind of proximity offered by Lloyd
and his coffee shop, where a community of like minded
practitioners clustered in search of the information that
would make or save them money.
Shipowners put more at stake, pound for pound, than in
most major fields. The structure of the profession ensures
that the risk is often hugely personal. The immediacy of
the digital world restores some of this Georgian flavour.
The coffee shop, with its characteristics of smoke, chatter
and coffee Arabica offered a door to companionship and
opportunity.
A dIGITAL TWIST
Lloyds List is merely continuing this tradition, with a
digital twist.
What started life as a printed notice pinned to a coffee
shop wall in London is now the shipping industrys most
29/01/2014 12:37
introduction
Today, readers can access Lloyds List from any coffee shop in the world
sophisticated online intelligence tool, accessible in any

coffee shop indeed anywhere in the world 24 hours a
day.
This next stage in our evolution at Lloyds List will
ensure that we are able to innovate and expand our digital
platforms, offering more in-depth analysis, more powerful
online tools and the most accurate and timely intelligence
service in the market.
The digital revolution has fundamentally altered the
distribution and organisation of content, but Lloyds
Lists near 300 year old tradition of authoritative, trusted
journalism and analysis performed by industry experts
remains unchanged.
Indeed, in the age of the internet, where information
is abundant, comment is free but verified facts are few
and far between, Lloyds Lists authority, accuracy and its
editorial independence are more important now than at
any point in our history.
300 YEAR SPRINT

The pace of change, both in media and shipping, is
necessarily relentless. As the articles in this final print
edition make clear, shipping is a sector that has always
evolved to meet that fundamentally unchanging need to
move commodities and finished products from where they
are to where they are needed. And it is our belief that there
is at least as much interesting innovation ahead as that
which lies behind us.
P1-22_INTRO.indd 6
In the age of the internet, where

information is abundant, comment
is free but verified facts are few
and far between, Lloyds Lists
authority, accuracy and its editorial
independence are more important now
than at any point in our history.
For shipping, the need for ever greater technical and

organisational efficiency will continue to drive innovation
at all levels.
Looking ahead for Lloyds List, we fully expect the
communications revolution to continue.
The recent 300 year sprint from letter, to telegram
and Boe Code, to mobile networks, e-mail and the web is
inevitably just the start. Expect computers in eyeglasses,
advances in holography and 3D representation, advances
in mapping, neural networks, quantum computing
delivering unimaginable speed and computer power
but check in again at 2,292. There will still be ships and
there will still be Lloyds List to analyse the risk and
opportunities inherent in their operation. n
www.lloydslist.com
04/02/2014 16:26
P1-22_INTRO.indd 7
29/01/2014 12:37
introduction
LLoyds List tiMeLine

1691
The story begins. Edward Lloyd opens his coffee house,
becoming the centre for news on the world shipping trade
from London.
The coffee house was situated
at 16 Lombard Street and
became the very centre of the
maritime business district.
At this time few London
merchants had their own offices
and therefore they transacted
much of their business at the
Royal Exchange, a meeting place in the City for businesses and
merchants.
The daily edition included new

information, mainly on the customs
records of ships entered inwards
and outwards in the port of London.
This move increased the paper to six
pages and circulation to around the
1,000 mark.
1884
merges with Shipping and
mercantile Gazette.
In 1837 the Shipping Gazette first
suggested a merger which was
haughtily declined by the committee
of Lloyds. However the merger went
ahead in 1884 and as early as 1890
there were mutterings of discontent
from the committee of Lloyds about
the Gazettes owner, Spottiswoode.
It had originally appeared as the
Shipping & Mercantile Gazette
and Lloyds List under a contract in
which Lloyds undertook to supply
the shipping intelligence but was
not otherwise concerned in the
publication.
News and information were exchanged collected in nearby coffee

houses which became centres for specialised interests. Upon
opening here, Lloyds fast attracted all those concerned with
shipping and this interest was fostered by holding maritime auctions
and collating information.
1734
The first Lloyds List appears, quickly moving from weekly to
a more frequent publication to keep professionals up to date.
Thomas Jemson founded Lloyds
List in 1734. This paper, unlike
Edward Lloyds earlier Lloyds
News, was at first given entirely
over to shipping intelligence,
taken to be a sign of the growth
of the underwriting business in
Lloyds. Journalists were broadly
considered to be disreputable at this point and the plan of Thomas
Jemson and his ad hoc team of coffee house proprietors was to publish a
morning and evening newspaper with concern for accuracy and a content
tailored to the needs of the customers of the City coffee houses.
1914
Ownership conferred to the Corporation of Lloyds,
incorporated by an Act of Parliament.
It was felt that Lloyds List and the intelligence Lloyds supplied was
propping up the Shipping and Mercantile Gazette and so in 1914
they parted ways. However, in 1916 it was possible for Lloyds List
to buy the Shipping Gazette for a reasonable price and combine it
under Lloyds control and until 1971 it was known as Lloyds List and
Shipping Gazette.
1837
Lloyds List published daily, except Sunday, reflecting
growing demand for reliable shipping news.
The move to go daily came in response to growing competition in
the maritime press. In 1801 a group of post office clerks launched
the General Shipping and Commercial List which largely pirated
the sources from which Lloyds List was compiled. The government
stopped the post office clerks from running a private business
with public resources and closed the publication in 1837. Another
competitor the Shipping Gazette, however, also launched in 1836.
P1-22_INTRO.indd 8
1973
Ownership transferred to Lloyds of London Press, which
merged with IBC in 1998 to become Informa.
Informa was formed in
December 1998 by the merger
of IBC Group plc and Lloyds
of London Press. Informa is
an international provider of specialist information and services for
the academic and scientific, professional and commercial business
www.lloydslist.com
29/01/2014 12:37
introduction
communities. Informa has over 150 offices in more than 43 countries

and employs 8,500 staff around the world.
Informa is the largest publicly owned organiser of conferences
and courses in the world with an output of over 8,500 events
annually. Informa publishes over 2,500 subscription-based
information services including academic journals, real-time news
and structured databases of commercial intelligence. Informas
book business has more than 50,000 academic and business titles
in print.
Its about investing in technology,

but it is also about how we stick to
the near 300 year old tradition of
authoritative, trusted journalism
and analysis performed by industry
experts.
1995
Lloyds List website launched.
This first launched as a replica of the
print edition and now has articles
dating back to 1991. A key feature of
the site has been the e-paper which
has replicated the print edition. For
the first time readers could email and
print stories as well as saving them to a clippings folder, enabling
them to create their own personalised archive folder. In 2009 Lloyds
List launched the web first initiative which allowed editors to post
stories online anywhere in the world, taking the focus away from the
print deadline and allowing readers to have access to information
around the clock.
2011
That year also saw the relaunch of www.lloydslist.com and the

launch of Lloyds List Intelligence, a fully-integrated intelligence
product that combines market news as it happens with exclusive
industry data and insight.
2013
Lloyds List announces move to totally digital
by December 20, 2013.
This landmark
decision represents
a commitment to
continuously innovate
and develop more
dynamic content that
better serves our
customers needs.
Lloyds List published for tablets and smart phones.

The app allows users to select any of
eight topics theyre interested in for
example, ports and logistics, finance
and markets or containers as well as
calling up eight market indexes whose
timeframe can be scaled with one finger
click.
Other features include the Editors
Choice and the apps offline functions.
If a subscriber downloads content within the range of a wi-fi
signal then it can be read later offline, for example on trains or in
aircraft.
www.lloydslist.com
P1-22_INTRO.indd 9
Its about investing in technology, but it is also about how we

stick to the near 300 year old tradition of authoritative, trusted
journalism and analysis performed by industry experts. In an online
market littered with unreliable reports, unverified statements and
unquestioned gossip, Lloyds List has committed itself to highest
standards of journalistic integrity and accuracy. Of course, we
must stick to the tested practices of good journalism that allows
our readers to connect trusted insight to action and identify
opportunities and threats that directly affect their businesses. But
we must also recognise that a digital platform offers new avenues
and platforms for the richer delivery and more effective sharing
of information. Thats why we have chosen to invest our editorial
firepower online, rather than sustaining a format that cannot match
our, or our customers demands.
30/01/2014 14:07
P1-22_INTRO.indd 10
29/01/2014 12:37
introduction
Shipping markets, cycles and maritime

information 1734-2013
times change but Lloyds List readers need for solid business intelligence remains
By Martin Stopford, former head of research , Clarksons
1. SHIPPING mARKETS ANd SHIPPING INFORmATION

1734-2013
Shipping is about markets and risk. The physical risk,
commercial risk and financial risk needed to ensure the
safe delivery of ten billion tonnes of cargo a year, more
than a tonne for every man, woman and child alive on the
planet today. The ships are fascinating - what could be more
engaging than the image of the classic clipper Thermopylae
beating its way round the Cape in 1872, bound for London
with a cargo of tea? The people are larger than life who
could not be excited by Brunel struggling to launch the
enormous Great Eastern broadside from its slipway on the
Isle of dogs . Or Aristotle Onassis at his Monte Carlo Casino
desk in 1956, waiting desperately for a miracle to rescue his
mortgaged and laid up tanker fleet . But the marketplace
is the real hero of the business. Its endless succession of
booms and busts has, over the last three centuries, driven
the shipping industry through a metamorphosis that would
astonish Edward Lloyd if he was still alive today.
The London Coffee houses set up by Edward Lloyd and
others in the late 17th century were the crucible of the
modern shipping market. Until that time the London Royal
Exchange was the market where merchants from all over
the world congregated At the centre of commerce there
is a great reverberation as if the conduct of finance could
only take place within Thunder . But by the 1690s the
industrial revolution was under way and colonial trade in
Asia, the Caribbean and East Coast N America was picking up
momentum. Gradually London was taking over the leading
role as a maritime centre from Amsterdam . Coffee was
the latest craze and the Royal Exchange businesses soon
overflowed to the coffee houses in Exchange Alley, and near
bye locations. A street survey in 1734 counted 551 coffee
houses in London . In 1700 Amsterdam had only 32. That
www.lloydslist.com
P1-22_INTRO.indd 11
The marketplace is the real hero of the business

compares with 300 Starbucks coffee houses in London today,
so there must have been one on every street corner.
Edward Lloyds coffeehouse in great Tower Street, London
was a rather crowded and noisy club, in which the members
spent most of the day over cups containing beverages
more exciting than Coffee. Much of the time was filled with
auctions; and from other sources we gather that these were
of strangely varied lots parcels of wine, shares in ships,
cargoes of prizes of war, and even leaseholder states .
Betting, another popular pass time, evolved into insurance
underwriting and when the premises moved to Lombard
Street in 1691 brokers were, apparently, underwriting risks
ranging from highway robbery to assurance of female
chastity .
But shipping and most importantly shipping market
information came to be the speciality of that particular
coffee house. Information passed between the patrons by
word-of-mouth, but Edward Lloyd was obviously a man who
understood the use of media to make information available
more easily than just chatting with whoever happened to be
there at the time. The auctions were conducted from a sort
of pulpit in the coffee house and, when not in use, Steele of
the Tatler noted that one of Lloyds servants read loudly and
continuously any items of shipping intelligence, but when
11
29/01/2014 12:37
introduction
Figure 1: Edward Lloyds list of Ships 1702

these were in short supply the reader, or announcer, would
entertain the company with a contemporary ballad or topical
skit .
Another example of Mr Lloyds gift for distributing market
intelligence came in 1702 when he started to publish a list
of ships that sailed from England, for East India and China,
and that not returned or known in England to miscarry,
and to whom they belong (Figure 1). In 1734 this list was
expanded into the newspaper, Lloyds List and by 1774 the
information network included agents in the UK and overseas
who reported particulars of departure or arrivals of vessels,
wrecks, salvage, or sale of property saved, etc.
The stature of the coffee house as a centre of market
intelligence for traders, shipowners and even governments
is illustrated by a news sheet report that on 11 March, 1740
Mr Baker, master of Lloyds Coffee house, in Lombard street,
waited on Sir Robert Walpole with the news of Admiral
Vernons taking Portobello. This was the first account
received thereof, and, proving true, Sir Robert was as pleased
to order him a handsome present .
Edward Lloyds successors built on his data network. Not
content with the list of ships (1702); and Lloyds list daily
newspaper (1734); Lloyds produced the first register of ships
in 1765. The Lloyds Register contained information about
each ship and classified it according to the excellence of
its construction and its continuing soundness or otherwise,
under the grades A, E, I, O and U (grade U vessels were
recommended not to sail out of sight of land!). By the time
Lloyds Coffee house moved to a fine suite of apartments in
the Royal Exchange on 14th of February 1774, it had become
an elaborate shipping exchange, with separate rooms for
subscribers and underwriters; merchants and captains. A
contemporary description gives a flavour of what it was like:In rebuilding the Exchange, a fine suite of apartments
was provided for Lloyds Subscription Room, which are the
rendezvous of the most eminent merchants, shipowners,
underwriters, insurance, stock, and exchange brokers. Here
is obtained the earliest news of the arrival and sailing of
12
P1-22_INTRO.indd 12
vessels, losses at sea, captures recaptures, engagements,

and other shipping intelligence, and proprietors of ships
and freight for insured by the underwriters. The rooms are
in the Athenian style, with Roman enrichments. They are
the Subscribers or Underwriters, the Merchants , and the
Captains Rooms.
At the entrance of the room are exhibited the shipping
lists, received from Lloyds agents at home and abroad, and
affording particulars of departure or arrivals of vessels,
wrecks, salvage, or sale of property saved, &c.
To the right and left are Lloyds Books, two enormous
ledgers, right hand, ships spoken with, or arrived at their
destined ports , left hand, records of wrecks, fires, or severe
collisions, written in a fine Roman hand, in double lined .
To assist the underwriters in their calculations, at the end of
the room is an anemometer, which registers the state of the
wind day and night; attached is a rain gauge.
By 1765 edward lloyd and his

successors had built the
framework for monitoring ships
and shipping markets during
the shipping revolution which lay
ahead.
By 1765 Edward Lloyd and his successors had built the

framework for monitoring ships and shipping markets
during the shipping revolution which lay ahead. That
basic framework of the shipping market did not change,
but the information flows were transformed. In the 1860s
information distribution made the leap from word-of-mouth
and letter to inter-regional cables. In the early 20th century
the cable network started to offer telephone and broadcast
telex, followed by automatic direct dialling in the 1960s; fax
machines in the 1970s; email in the 1990s. The World Wide
Web has opened access to large databases, applications
and in many businesses online trading. Strangely, this latest
development has yet to penetrate the shipping market.
2. The 22 MarkeT CyCles sinCe The 1sT ediTion

of lloyds lisT
Turning to the shipping market and its cycles, the two and
a half centuries since 1734 has seen an unprecedented
transformation. At the beginning of the 18th century sea
trade was still dominated by the same commodities that had
been traded since medieval times - textiles, woollen cloths,
timber, wine, groceries but as the industrial revolution
www.lloydslist.com
04/02/2014 16:39
introduction
gathered pace new industrial cargoes like wrought iron

and coals were growing rapidly . British foreign trade (net
imports and domestic exports) increased from 10 million in
1734 to 46.7 million in 1800. As the century progressed the
character of imports changed. Semi-tropical foodstuffs and
raw materials from the Americas appeared and London, with
its network of colonial trades and growing exports of iron and
manufactures, backed up by financial and shipping services,
gradually moved into a leading position in world shipping.
The long haul Asian trade was still controlled by the
English and Dutch East India Company monopolies, but the
Atlantic trade was served by small traders operating in the
Baltic; the Mediterranean; the West Indies; East Coast N
America and sometimes West Africa and Brazil.
Shipping investors shipowning was not recognised
as a trade until the early 19th century were at the epicentre
of this rapidly changing world and shipping cycles were the
mechanism that drove them forward, year by year. Their
relentless pressure improved technology and reduced
costs, first pumping cash into the market during booms
to encourage investment, then drawing it back during
recessions to squeeze out the old ships and the inefficient
or badly managed shipping companies. Not many markets
can boast such a long and well documented history of feast
and famine and the twenty two cycles since 1734 which
performed this task are charted in Figure 2.
Shipping investors shipowning

was not recognised as a trade until
the early 19th century were at the
epicentre of this rapidly changing
world and shipping cycles were the
mechanism that drove them forward,
year by year.
This unique series of freight rate statistics reveals two
distinctive features of the shipping business over the 279 year
period during which Lloyds List chronicled the markets. The
first is the pattern of short cycles. Take a good look. They are
undoubtedly cycles, but there is no real pattern. Like waves
hitting a beach, the cycles came in all shapes and sizes, some
short, some long, with the odd tsunami thrown in for good
measure. Each has its own economic explanation, and getting
to grips with the drivers of successive cycles remains one of
key business challenges facing each generation of shipping
investors. It is particularly difficult because these short cycles,
averaging about 10 years peak to peak, are influenced by
unpredictable economic events (most recently the Credit Crisis)
and the even more unpredictable behaviour of market players.
Figure 2: Shipping cycles (mainly coal) 1734-2013
www.lloydslist.com
P1-22_INTRO.indd 13
13
04/02/2014 16:32
introduction
Maritime Economics 3rd Edition, Martin Stopford
Freight Index 1752-2013 & Long Cycle Trend
3,500
Trend Series
Annual Freight Index
3,000
2,500
2,000
1,500
1,000
500
2012
2002
1992
1982
1972
1962
1952
1942
1932
1922
1912
1902
1892
1882
1872
1862
1852
1842
1832
1822
1812
1802
1792
1782
1772
1762
1752
Figure 3: Freight Index
Secondly these freight statistics are not adjusted for

inflation. The index reports money of the day freight
rates and astonishingly a trend line fitted through the chart
is almost flat. Put another way, the index value of 98 in
1734 is in directly comparable with the index value of 110
in 1998. Over the whole period, inflation in freight rates
averaged 0.17% per annum. This is a very difficult number
to believe, when you consider that in 1795 the weekly wage
of a carpenter in England was about 3 shillings, or 0.15 in
todays currency, compared with 120 today. How could this
be possible?
3. THE LONG CYCLE IN SHIPPING FREIGHTS

THREE WAvES OF CHANGE THAT SHIPPING HAS SURFEd
The answer is that the shipping industry was remarkably
successful in surfing three fundamental techno-economic
waves in the global economy. The first was the evolving
global market place, supported by the information
management started from London coffee houses in the late
17th century . This opened the way for a global transport
system. The second was the fossil fuel revolution which
allowed shipowners to build steel ships powered by steam.
Thirdly after centuries of colonial trade restrictions, the
free trade era which started at Bretton Woods in 1944,
replaced the restrictive European colonial system with an
open system of free trade which, within the framework of
the United Nations, gave every nation state an equal vote.
14
P1-22_INTRO.indd 14
This gave multinational companies the framework to develop

deep sea trades in raw materials, semi manufactures and
manufactured goods which would not have been possible
under the colonial system which inevitably involved an
element of national preference. This change provided a new
stimulus to global trade.
Against this background the repetitive but irregular
sequence of short shipping cycles conceals an industry
which was constantly in a state of seismic change. Or
perhaps a better way to put it is that the short shipping
cycles concealed much bigger trends below the surface.
Those shipowners who perceived this change and adapted
earned great wealth. Many others followed, and made a
decent living, which in a world of multimillion dollar assets
could still be extremely rewarding. But when the shipping
industry profit and loss account is drawn up, the wealth of
a few; the modest earnings of many; and the spectacular
losses of the others were just the crumbs falling from the
table of global trade.
THE REAL PATTERN OF FREIGHT RATES 1734-2013
To identify the long cycles or trends which occurred during
this period, the freight statistics were first deflated using a
composite inflation index, mainly based on the United States
inflation rate. This deflated series is shown in figure 3, and
the pattern is very different from figure 2. Between 1752 and
1814 the freight index increased from 2000 to 2500 in real
terms. Then from 1814 through to 1973 it fell continuously,
www.lloydslist.com
29/01/2014 12:38
Maritime Economics 3rd Edition, Martin Stopford
introduction
Summary of Long Cycles 1734-2013

Year
Start
Freight Trend
Finish
Length
Start
Finish Av change
1752
1814
62
2000
2500 7.7 Sailing ship era
1815
1865
50
2100
1560 - 11.0 Steam power developing but sFll weak
1866
1914
48
1500
1160 - 7.6 Modern

steam & cable revoluFon
1922
1937
15
1300
1150 - 10.8 World wars and stagnant technology
1947
1974
27
700
250
- 14.3 GlobalizaFon, mechanizaFon, comms
1975
2013
38
250
270
0.4 Sluggish technology, internet , oil price rise
Notes
Figure 4: Long cycles or trends in real freight rates 1734-2013
from around 2500 to 250, a tenfold reduction. Finally, and

intriguingly, in the final period from 1975 to 2013 the index
stopped falling and for the first time in a century started to
rise.
To provide a better perspective, the period was divided
into the 6 phases shown in table 1. The first runs from 1752
to 1814; the 2nd 1815 to 1865; the 3rd 1866 to 1914; the 4th
1922 to 1937; the 5th 1947 to 1974 and finally 1975 to 2013. In
each case the trend was analysed. Table 1 shows the value of
the freight index at the start and finish of the period, along
with the average change which was identified by fitting a
linear trend to the freight data. The values of the average
change quantify the pattern of real freight rates over the
period.
ENd OF THE SAIL ERA 1752-1814
Between 1752 and 1814 the index rose by around 7.7
index points a year. This probably reflects the fact that
sailing ship construction was a mature or business,
with no significant productivity increase, but with
the usual pressures from inflation and rising costs as
industrialisation progressed. Commerce was busy and
the shipping business was growing. But sea transport
remained a precarious and unpredictable business, using
small wooden ships, few capable of carrying more than
300 tons, and always dependent on the weather. In an
age of precision timing it is difficult to appreciate just how
difficult trade must have been, so a few examples will help
to put the pace of trade into context. In 12734 a typical
Atlantic crossing from Liverpool to Philadelphia took 45
to 60 days and in 1741 the unfortunate Capt Higgins was
forced to abandon his vessel for want of provisions, when
144 days out from Dublin for Philadelphia . It seems that
Lloyds list immortalised such voyages by awarding the
wooden spoon for the slowest passage.
www.lloydslist.com
P1-22_INTRO.indd 15
BEGINNING OF STEAm 1815-1865

From 1815 to 1865 the index fell 11 points a year. During
this century the construction of steel ships with ever
more efficient steam engines provided shipowners with
the opportunity to dramatically improve performance
and overcome the problems of wind and tide. Meanwhile
the cable network, which started in 1866, was boosting
productivity by reducing waiting time and improving the
whole global logistics of sea transport. The lower increase in
the 2nd half of the period is at first sight puzzling. Possibly
that could be due to much longer voyages undertaken by
steamships as they developed the Asia and North Atlantic
trades on a much greater scale than previously.
A good illustration of the technical revolution which
was going on at this time is a ship called the Agamemnon,
built for Alfred Holt in 1865 by Scott and Co. at Greenock.
Generally regarded as the first modern cargo liner, it pulled
together the technology which had been evolving over the
previous 30 years. The ship was 2,280 GRT, with a single
screw driven by a 945 hp steam engine. It cost 52,000, an
enormous sum at that time. However in 1865 it completed
the passage from Liverpool to India in 77 days, an average
of almost 6 knots. On a good run some of the best sailing
ships could match that speed , but the Agamemnon brought
reliability and independence from wind and weather, a
uniquely valuable innovation. That illustrates the technology,
but the power of market cycle was demonstrated a couple
of years later in 1869 when, at the peak of cycle 8, the
Agamemnon loaded 2,516,000lbs of tea at Hankow. This
was the largest quantity ever loaded into a single ship and
the freight income for the voyage was 28,087, more than
half the original cost of the ship . To match that the Maersk
McKinney Moeller, todays biggest liner, would need to book
around $90 million of revenue for a single voyage. And it was
a good deal for the shippers too. The Agamemnon was the
15
29/01/2014 12:38
introduction
first ship to arrive in London with the new season tea crop
and its cargo sold at a premium of 2d per pound, an extra
20,966. Incidentally, the Agamemnon had 3 sister ships,
each plying the same trade.
THE COmmUNICATIONS REvOLUTION 1866-1914
In the period, 1866 to 1914 the index continued to fall
by 7.6 points a year from 1372 to 1221 . Having sorted
the steamship design, the next really big change was in
communications. Between 1865 and 1914 the inter-regional
cable network was installed. Many of these cables radiated
from London, and the Baltic Exchange took over the market
role. Lloyds continued to handle the insurance side of
the business, but the meeting place for owners and cargo
interests was picked up by the Virginia and Baltic Coffee
House.
The Baltic had been a popular shipping venue for a
century, in 1744 advertising itself as the place where all
foreign and domestic news are taken in; and all letters or
parcels, directed to merchants or captains in the Virginia or
Baltic trade will be carefully delivered according as directed
and the best attendance given . By 1823 it had a committee,
rules and an auction room where tallow was traded . When
By the time email appeared in the

late 1990s the process was complete
and todays market is conducted
by brokers sitting at their screens,
juggling phone calls, emails, and
e-messenger services or on mobile
phones and Ipads if they happen to be
out of the office.
cables arrived in the 1860s it rapidly became the trading floor

for the world tramp fleet. Brokers circulated details of ships
and cargoes at the Baltic, struck deals and cabled the terms
to their principals in the briefest possible form.
The Clarkson history records that in the 1870s Leon
Benham, Clarksons leading broker, visited the Baltic
daily, writing fixtures on the paper cuff of his shirt, then
rushing back to the office to cable clients . The cables were
Figure 5: Freight index
16
P1-22_INTRO.indd 16
www.lloydslist.com
29/01/2014 12:38
introduction
prodigiously expensive, but the effect on the efficiency of

shipping was dramatic. Ships no longer had to guess where
a return cargo was available the broker walking round
the Baltic trading floor would soon find it, and cable sailing
instructions.
The surge of investment in new ships, reinforced by the
cable revolution drove the annual freight index shown in
Figure 3 down resolutely from 97 in 1866 to 53 in 1910. This
decline was propelled by a series of cycles which peaked
in 1872; 1890; 1900; and 1907. Brokers reports at the time
convey an increasing puzzlement over the surge of orders for
new steam ships at each peak, which seems destined to drive
the market further down as they were delivered during the
trough. For example the brokerage Angier Bros commented
in their annual report for 31 December 1901 the comparison
of the last 4 cycles (10 year periods) brings out a marked
similarity in the salient features of each component year, and
the course of prices; and a still further retrospect shows that
in the successive decades the periods of inflation gradually
shrink, whilst the periods of depression correspondingly
stretch out.
Ship brokers do not always see the whole picture, but a
comparison of the earnings of the Oceanic Steam Navigation
Co Ltd between 1880 and 1914 (figure 4) suggests that
the declining freight trend, as measured by the Maritime
economics freight index (MEFI), was matched by a decline in
company earnings. In 1880 Oceanics earnings were 6.17
per GRT, but by 1912 that had slumped to only 2.13 per GRT.
In addition to illustrating the correlation between company
earnings and freight rates, this might provide an insight
into one of the best-known shipping events of all time, the
loss of the Titanic. Oceanic Steam Navigation was the parent
company of White Star, which ordered the Olympic and
Titanic in July 1907. Earnings at that time were 2.85 per GRT
and brokers commented on the increase in the enormous
difficulties which are beset the shipowner in his efforts to
find such employment for his tonnage as will not involve him
in a heavy loss. By 1912 earnings had slumped even further
to 2.13 per GRT and White Star must have been under a
good deal of market pressure. Could this financial pounding
have influenced the chairmans determination to win the
Blue Riband and consolidate the new super liners position
as the outstanding market leader? Its an intriguing thought
and perhaps a link between market cycles and this infamous
shipping event.
INTER WAR ANd THE GREAT dEPRESSION 1922 TO 1940
The period from 1922 to 1937 shows a continued decline,
though the prices in this period dont quite line up with
the pre-war era. Not much happened technically to ship
design, but this period saw the communications revolution
moving steadily forward. In the 1930s the telephone
became a serious means of global communications
www.lloydslist.com
P1-22_INTRO.indd 17
This chapter has barely scratched

the surface of shipping during the
279 years since Lloyds List became
an essential accompaniment to the
shipowners morning coffee.
and in the 1960s the broadcast telex network started
to turn shipping into a virtual rather than an interpersonal market. Direct dialling switchboards and fax
added another dimension in the 1970s and 1980s. By the
time email appeared in the late 1990s the process was
complete and todays market is conducted by brokers
sitting at their screens, juggling phone calls, emails, and
e-messenger services or on mobile phones and Ipads
if they happen to be out of the office. Interestingly the
process has not yet made the great leap to on line trading,
perhaps because some vestige of personal relationship
remains. The timeline for reaching todays near virtual
market place is summarised in Annex 1.
Technology from earlier periods continued to be applied,
but with few real innovations. The diesel engine, which first
went to sea in the Danish Selandia in 1912, was more widely
used as bunker oil became available. Although the ships
did not change very much during the inter war period, from
a broader perspective the interwar period saw two notable
developments.
The first concerns the sailing ship. Despite the
technical advances during the previous century, a
stalwart group of shipowners stuck with the sailing
ship. Modern technology helped enormously, allowing
hulls and masts to be built of steel; steel wires;
steam winches; and a host of minor improvements
which allowed the sailing ships to be bigger; faster
and requiring fewer crew. These low overhead ships
migrated to the trades where they could still undercut
the steamers, notably the Australia wheat trade. But
the collapse of the 1920 super cycle (see figure 2) put
an end to even that trade. In 1921, sixty eight deepwater sailing vessels loaded wheat in Australia for
Europe; the following year the number was only 7 and
the maximum in the years 1922 to 1939 was 22 in 1934
. To all intents and purposes sail was dead, a process
which had taken 100 years from the introduction of the
first steam assisted ships in the 1830s. Only the intrepid
Gustaf Erikson persisted, buying up the last few decent
ships from his competitors. The last fixture, in 1939, was
Eriksons Pamir, a charter arranged by Clarksons for a
200 day voyage carrying grain from Australia .
But as the last sailing magnets were abandoning the
business, an even more prescient event was at hand.
17
29/01/2014 12:38
introduction
In 1920 the Dutch airline KLM, set up in business,

followed by Imperial Airways in 1924. These events,
remote from shipping, were eventually to deprive the
shipping industry of one of its most important and
profitable cargoes, the transportation of people between
continents. In addition to losing its most important
cargo, the industry lost its prominent public profile,
transforming major shipping companies, which were
previously household names, into anonymous industrial
carriers.
GLOBAL FREE TRAdE ANd THE INdUSTRIAL
SHIPPING 1947-1974
The post-war era from 1947 to 1974 saw the greatest fall
yet recorded, with the freight trend index declining at
14.3 units per annum, demonstrating that changing the
way trade is organised can be even more powerful in
terms of improving efficiency and cost than focusing on
the technology of the ships themselves. The opening up
of global free trade after the Bretton Woods conference
in 1944 allowed shippers to mechanise sea transport.
The story is too well known to need repeating. Tankers
increased in size from 17,000 deadweight to 500,000
deadweight, whilst bulk carriers grew from 10,000 dwt
to Panamax and Capesize bulkers in the heavy end of the
raw material trade. When containerisation got started in
the 1960s the transformation to a modern mechanized
transport system was complete.
SHIPPING SYSTEm mATURES 1975-2013
But during the final period from 1975 to 2013 there was a
complete change of trend. The curve flattens out and the
deflated freight index in Figure 3, which started the period at
232 in 1975, ended up at 260 30 years later in 2012. Analyst
with a long memory may not be too surprised at this. By 1975
most of the low hanging fruit in terms of shipping system
gains had already been harvested. During the next 30 years
tanker sizes did not increase much and container and bulk
carrier sizes edged up. The diesel engine was already widely
adopted, and was so close to its thermodynamic limit that
major improvements were not possible. Also during this
period, for the first time in a century, there were significant
increases in the cost of fossil fuel. At the beginning of the
period in 1973 bunker oil costs $17 a tonne, but by the end of
the period it had reached $600 a tonne, with the prospect of
further cost increases due to environmental regulations.
CONCLUSIONS
This chapter has barely scratched the surface of shipping
during the 279 years since Lloyds List became an
essential accompaniment to the shipowners morning
coffee. Along the way sailing ships have been replaced
by massive container ships; cargo markets have become
18
P1-22_INTRO.indd 18
The Baltic had been a popular

shipping venue for a century, in 1744
advertising itself as the place where
all foreign and domestic news are taken
in; and all letters or parcels, directed to
merchants or captains in the virginia or
Baltic trade will be carefully delivered
according as directed and the best
attendance given.
real time and global; and freight is so cheap that it
doesnt matter where multinational companies carry on
their business. For all these reasons shipping is truly the
bedrock of globalisation.
These achievements were built on the foundation of a
uniquely open market. Access to cheap money and the ability
to register under flags which allow shipping companies to
focus on what theyre good at running ships cost effectively
cleared the way for freight rates which today are not much
different in money terms from the rates paid 50 or even 100
years ago.
But one trend is worrying. After the 1973 oil crisis the
century long downward trend in real shipping freight
rates levelled out. Shipping is no longer reducing costs.
Of course statistics can be misleading, but this change
of trend carries conviction. Maritime technology is very
mature, with no fundamental design improvements over
the last 40 years, just fine tuning. Economies of scale,
the bedrock of past cost reduction, is running out of
steam.
Meanwhile fossil fuels, the magic ingredient of modern
shipping, are getting more expensive. In short, shipping
is back where it started when Edward Lloyd opened his
coffee house in Great Tower Street, London in the 1690s
struggling to squeeze a little more performance out of
mature ship technology and long established transport
systems.
For an industry formally committed to cutting the carbon
footprint by 50% by 2050, this is a worrying situation. For a
century the shipping industry has played the same technical
tune, better and better. But today a new tune is needed and
the shipping industry must whistle up the wind of change,
just as Edward Lloyd and his colleagues did in their coffee
houses 279 years ago.
But thats for tomorrow. Today shipowners can look
back with pride on what their predecessors achieved whilst
navigating through 22 market cycles and, of course, always
ordering far too many ships! n
www.lloydslist.com
29/01/2014 12:38
introduction
Old versus new, part one

the printed Lloyds List will be missed but we must applaud what it has done
By Jim Davis, chairman, IMIF
t is quite a shock to me (obviously a fuddy-duddy

curmudgeon) to realise that very soon there will
no longer be an actual newspaper Lloyds List.
the paper has been part of my life for the 61 years
since I joined the great P&O SN Co back in 1952, as a
new graduate from Cambridge. Even before that I had
enjoyed the occasional read of it when my father,
himself a doyen of the shipping industry, brought a copy
home.
How the newspaper has changed over those six
decades! I do not mean to be patronising when I say that
the paper of the 1930s and 40s was rather low in
analysis and comment. It did however reflect the industry
of the time. the icons of the industry then were the great
liner companies: P&O Group, Cunard Group,
Royal Mail Group, Ocean etc and Lloyds List was the
printed vade mecum in order to access sailing
schedules and major innovative happenings such as in
new buildings, and mechanical equipment (stabilisers...
a momentous step forward for the faint hearted
prospective seasick passengers). I used to devour
those copies which was a prophetic sign that for
me having already experienced a few years in
the Royal Navy a career in shipping was my only
ambition.
COSY INDUSTRY
When I had myself joined the Industry I recall the
wonderful characters who contributed to Lloyds List:
Jack Frost, Denis Burgess and many more. tangentially
the introduction of Seatrade magazine, which adopted
straightway a commercial as distinct from mechanical
style to its reporting seemed to me to jog Lloyds List
into taking a more inductive role into the commercial
and trading issues of shipping and shipbuilding.
Its earlier style, though attractive, did major on
schedules and on faithfully recording the press
www.lloydslist.com
P1-22_INTRO.indd 19
I used to devour those copies which

was a prophetic sign that for me
having already experienced a few
years in the Royal Navy a career in
shipping was my only ambition.
releases put out by the great companies. I knew
because then I was responsible for the PR and press
releases put out by my adored P&O. Shipping was a cosy
industry then and Lloyds List charmingly reflected it.
Of late, however, Lloyds List has become a challenging
paper. It bravely discusses the serious issues and the
commercial doings within it.
TAKEN FOR GRANTED

Shipping has never reached the pinnacle in the
public comprehension that it merits. Almost everything
our island nation needs for its daily life has been brought
by sea and yet the sheer efficiency (and self-effacement?)
of the industry has resulted in its efforts being taken for
granted.. the only time it and its faithful mariners
(the MN badge wearers) are given acclaim tends to be in
times of war. Remember the terrible bravery and
casualties during the fearsome U-Boat Battle of the
Atlantic in World War 2?
the transition of the worlds oldest business
newspaper to a digital only service will, I repeat, be a
shock to the system for me and others of my generation.
But that is progress. I am mindful that to the young
turks, a digital service is no problem while for me
I have to turn humbly to the expertise of my daughters
and my talented personal assistant in order to remain in
touch.
Printed Lloyds List, you will be hugely missed, but I
humbly applaud all you have done and you merit a unique
place in the progress of the maritime world. Valete and
warmest thanks. n
19
30/01/2014 15:31
P1-22_INTRO.indd 20
29/01/2014 12:38
introduction
Old versus new, part two

Moving from media monologue to media dialogue: the social media revolution and
how it will change your business behaviour
By Birgit M Liodden, secretary-general,

YoungShip International
few decades ago, the mobile phone was doomed

by a generation of ship brokers. It will never fit
our needs, they claimed. Ours is a relation-based
business or telex is the only way to effect our
work, were frequent comments. I would kindly ask you, dear
reader, to please raise your hand if you still do your main
business through the telex.
Today, the smart phones and various pads have once
again dramatically changed our communicational habits.
we are online 24/7, both you and I expect an instant reply
to any enquiry we might have, and all the massive floods of
information is out there, on the world wide web.
for the newspapers and magazines, this represents a
major challenge. who will want to pay for freshly printed
news, when the online sources are available even fresher?
Today, everyone can be a newsmaker. All it takes is a
website/blog, initiative and some dedicated time to write, or
at least to share other peoples stories. People who claim to
understand the development state that while getting access
to a enormously bigger pile of news and information, we will
in the future seek information that suit our specific views
and interests. And that the polarisation of various society/
interest groups will continue to grow.
UnKnOwn fUtUre
This enormous pile of information often comes free of charge,
accessible whenever, wherever. So how will the traditional
media houses comply in this new environment? They have
huge costs, large numbers of staff, huge challenges when it
comes to choosing the right platforms and technologies for
the rapidly changing and unknown future.
There is something unique reading the written
newspaper physically, you might argue. further, you
will probably say that you will never get used to reading
your newspaper online, or via an iPad or smart phone. I
understand where you come from. I am a true enthusiast
www.lloydslist.com
P1-22_INTRO.indd 21
On my way to a Lloyds List judging

meeting in London, I bought a
Kindle completely by chance.
for books. Never, ever would I read the so called e-books.
It wouldnt give me the same experience. well, so I thought
until two years ago. which was when I got tired of dragging
my heavy books along on quick, efficient business trips or
long vacations. On my way to a Lloyds List judging meeting
in London, I bought a Kindle completely by chance.
ADAPt tO SUrVIVe
I still love books. I still have a big shelf filled with my
favourites. I still buy books that are special to me and enjoy
the feeling of touching the paper and covers. But whenever I
travel for business or pleasure, I bring my light, small Kindle
with me. It saves weight, I can download new books from
anywhere in the world, at any time. Its efficient. Its part of
the future.
And this leads me to the point of my story. we need to stay
efficient to stay in business. The media houses will survive
just the same way that any shipping company will survive
by adapting to new times, new technology and changing
environments. They will because they have to. They will
lead us as readers, in the same way we lead our clients and
customers. By delivering the new and optimised solutions
before our competitors.
If I need to get updated on the latest news and
developments, I will not wait on a printed paper. I will read
it digitally, on the bus, at the airport, from a caf in Buenos
Aires or Dubai, or in the peace and quiet of my own bed.
Not two weeks after its published, when I return to my own
office. If something important or urgent happens, I want to
know the details NOw. I will seek it out via Twitter, facebook
or LinkedIn, through a quick Google search or through a link
sent to me by a business partner. I will download the newest
21
30/01/2014 14:08
introduction
analysis and reports to my iPad/Mac/Phone, and read it from

offline modus while on the plane from Mumbai to Oslo. I want
to save my favourite articles by marking them with a flag in
the digital news archive, not storing the torn-out pages in
my desk. I wish to have the information and latest updates
available wherever I am. So that I can do business efficiently,
and have the right basis for my decisions. I want to know
whats happening now, that might be relevant and affect me
and my business.
Yet, at the same time as I want accessible information,
I also want to ensure that I get reliable and proven
information. This is where the digital papers come in.
Representing an industry with such need for adapting
to change, I am very pleased to see that Lloyds List, as the
oldest newspaper in the world, take their future seriously
enough to think progressively. The paper-reading shipping
generation will eventually sail towards new horizons, and
the generation that is only a few years younger than me, will
22
P1-22_INTRO.indd 22
At the same time as I want accessible

information, I also want to ensure that I
get reliable and proven information. This
is where the digital papers come in.
have grown up with anything from childrens books, games

and music gathered in one single small media device. I doubt
they will claim the same unique feeling when it comes to
reading a printed paper.
On behalf of the next generation of shipping
professionals, I wish to congratulate Richard Meade and his
staff on their brave decision, quite certain that it is the right
way to navigate. n
www.lloydslist.com
29/01/2014 12:38
PEOPLE
P23-55_PEOPLE.indd 23
29/01/2014 12:53
PEOPLE
Hail to the good owner and the seafarer

Shipping is first and foremost a people industry
nce, not long ago, we had an editor who was

actually a ship captain. His name was Michael
Grey. We asked him to define who it was that
Lloyds List was writing for. His reply: The Good
Owner.
So who is this mythical beast, the good owner? Perhaps
a useful point of departure would be to describe him in the
obverse. It is very easy to list what bad owner is. Let us first
explore what a good owner avoids we can think of ten
points immediately.
1. A good owner avoids buying ships when rates are
$120,000 per day.
2. A good owner doesnt renege on charter party
commitments because they are onerous.
3. A good owner doesnt spend a weekend in a corporate
golf retreat in Thailand while his company is in
bankruptcy court in Texas.
4. A good owner does not leave his crew stranded in Suez
for six months without pay or supplies, blaming his
banks for the crisis.
5. A good owner doesnt regard the Maritime Labour
convention as a nuisance that requires minimum
attention.
6. A good owner doesnt launch an IPO on Wall Street
offering a highly leveraged business model, then
default, while the shareholders take a bath
7. A good owner doesnt reflag to Mongolia to avoid
minimum safety standards
8. Likewise, a good owner doesnt accept a cargo of nickel from
Indonesia to china without ensuring proper checks that rain
seeping into the hold hasnt liquefied the cargo.
24
Shipowning has changed over the years
9. A good owner doesnt find itself in chapter 11 twice (at

least without changing his companys name).
10. A good owner tends not to boast about his service to
his country when he enjoys the most favourable tax
regime known to man, particularly when his country is
bankrupt and being bailed out by taxpayers elsewhere.
(on the other hand, maybe there are good owners that
do this).
It is easy to say whats wrong with shipping. There have
been so many examples. And it is always tougher in life to
define the good rather than nail the bad.
Good owners surely exist, but they have hardly had
unblemished careers. John Fredriksen spent some time in
police custody while a famous case in norway was being
investigated. The late Sammy Ofer, successful as he was,
faced deep financial trouble with Zim, the Israeli shipping
www.lloydslist.com
29/01/2014 12:53
people
line and a family owned company. Even Maersk Mc-Kinney

Moller faced deep struggles at one point in his long career.
Yet all of these owners could be said to be the best. So an
unblemished life is not what were after.
the good owner must be a

combination of an operating
manager and an accountant.
managing trouble
It would seem that to be a good owner in the manner of
the paragon were referring to here the key is how he or
she manages trouble, rather than whether he or she has
avoided it.
That said, you want a good owner to have been truly
successful at least once in a long career. And by success,
I mean more than operating ships in lucky markets when
rates bring in cash with ease. It is easy to look successful
when you happened to have deployable capesize vessels in
late 2007.
Success in shipping is sustained profits over time, which
means that good owners need to have their own views
about when to invest and when to hold back, and the ability
to act on them.
This is no easy profession, and to do well, the winners
tend to be complex people. Martin Stopford, Clarksons
former head of research and author of Maritime Economics,
suggested that the good owner is schizophrenic, or more
precisely, possesses a multiple personality.
One the hand, the good owner must a good combination
of an operating manager and an accountant. Someone
with the spirit of detail who understands the moving
parts of the business, and keeps a vigilant eye on costs.
Shipping in many respects is a lonely business. When
you visit shipping companies, you often dont see a lot of
people in the office. The decision makers are not backed
up an army of bureaucrats that you might see, for example,
in an average industrial company making refrigerators.
Therefore, a grasp of the functions of business and
an instinctive grasp of cost, working capital, status of
cashflow are essential.
Moreover, the good owner in this incarnation of
his personality knows a lot about ships: how theyre
maintained, the timetable and cost of compliance, the
impact of fuel costs, the cost, say, of employing security
guards.
practical knowledge
Very frequently when you meet a good owner youll be
stunned not by an impression of smooth business acumen,
but by practical knowledge. Hell be able to tell you how
to optimise costs in lay up; that a certain port has not yet
built the capacity to accommodate his new post panamax
ships, despite claims by the local government; the cost of
repatriating seafarers that fall sick on board; and a host of
other essential facts that sometimes demand attention. The
good owner is conversant with all of them.
www.lloydslist.com
maersk mc-kinney moller
Equally, a good owner knows his customers business to

the degree that he can sense demand and opportunity. He
knows the pressures and opportunities his customers are
facing in their own markets; whether customers business
is cash rich or under financial strain, even the regulatory
constraints his customer faces.
Thats one incarnation good with detail, capable of
commanding a range of practical knowledge, understanding
the customer, and able to make decisions without a lot of
paperwork and bureaucratic support.
The other personality is bit more dramatic. Good owners are
unafraid of risk. Theyre big personalities that can sit at a dinner
with bankers and convince the bankers, in a market where
bankers are worried about losing their jobs, to lend half a billion
dollars for a fleet of 10 new ships. And then sleep at night.
Youve noticed, of course, that theres no magic bullet in
this profession. Theres no Steve Jobs that comes up, time
and again, with the right answer to consumers need. John
Fredriksens Frontline had to split itself in two and he had
to commit large sums of his own capital rather than go
begging to his bankers to solve the problem of how to keep
this company from bankruptcy. This was necessary, because
even he didnt see the mess in the tanker market. There are
times when Mr Fredriksen has made remarkably canny calls.
But it is survival from his mistakes that makes him most
interesting. Even here, he has been unafraid of taking risk.
The object being that the only way out of bad call is to take
risk in another direction. His diversification into offshore has
balanced his fortunes. His solution to the Frontline retaining
the older tonnage and much of the debt in one company, while
creating a new company packed with newbuildings on order
and devoted to buying new eco tonnage at current low prices
is as bold as anything hes done. No one is paying attention
to the fact that Frontline nearly went bust two years ago.
The fact that he has devoted his own capital to address
his problems and set out in a new direction, also reassures
bankers who are famously skittish in the post-Lehman
market. Hes able to get funding for his both wet and dry
shipping companies and has almost singlehandedly
revived the dwindling fortunes of several good shipyards in
China and Korea.
25
30/01/2014 14:09
people
Shippings big personalities, (l-r) Chang, Fredriksen, Moller, Andersen and Ofer
a matter of character
To sum up the second side, this big personality incarnation,
of the good owner, hes able to live large, spot big risks that
are going pay off, and not only sell these risks to the money
people, but get them to go along for the ride with him. And the
convincing involved has little to do with a spreadsheet and a
business plan although this of course has to be acceptable it
has to do with reassurance and trust. Its a matter of character. If
the bankers trust the owner, sense his full operating knowledge
of the business, respect both his common sense and courage,
theyre likely to take the bet with him.
By necessity, this big personality side of the good owner is
contrarian. He makes moves while others have not yet dreamed
of them, and hes not afraid to go against the grain. Its hard to
tell yet whether Nils Andersens decision to invest in a fleet of
18,000 teu ships will be market winner that Maersk intended it
to be. Those ships could well be problematic. But the bold move
to build them is characteristic behaviour of the good owner.
a lonely job
Likewise, Dr Chang Yung-fa of Evergreen held back for years
from ordering ultra-large boxships. Of course, Evergreen
eventually did invest in the ULCCs, but note the timing.
Dr Chang refusal to invest in bigger ships kept Evergreen
in better condition than most peers during the shocking
downturn of 2008 2009. When he finally did allow
Evergreen to invest in the ULCCs, it was at the end of the
ordering cycle and the shipyard price had come down. He
got a sweetheart deal.
26
Notice that were talking about individuals. Shipping is a

lonely profession. Individuals go out on a limb, but boards
rarely do. And when they do, they are usually following the
inspiration or folly of a single persons vision. Because of
the nature of shipping success investing at the right time
with the appropriate ships and spotting the demand that
justifies the risk decisions can look instinctual, the kind of
decision that is impossible for a collective body like a board
to get right.
Like all individuals who strike out on a new path there
many others who will urge caution or a half-way measure.
The good owner has to have the kind of personality that
rides roughshod over silly people and simply knows that his
plan is the right thing to do.
Finally, you cannot be a good owner and forget that you
are responsible for the wellbeing for many individuals on
your ships, who operate in a dangerous profession. No good
owner ever took the difficulty of working at sea for granted.
He looks after his people, and often they reward him with
loyalty.
In that regard, we decided this year to give the
spectacular shipping owner a rest at the very pinnacle of
this list. Instead, we celebrate, in this year of the onset of
the Maritime Labour Convention, the very individuals that
allow good owners to be owners at all. Whether you own
a ship, own cargo, set shipping policy, or provide finance
or legal support, take time out to reflect this year on the
individuals that form the real backbone of shipping, and, as
such, global trade. n
www.lloydslist.com
30/01/2014 14:10
29/01/2014 12:53
Quality around the clock

and against the elements
Around the clock, against the elements,
Thenamaris delivers a wide variety of
cargoes for clients worldwide: safely,
securely and efficiently. Combining
fresh energy with 40 years shipping
experience, we manage a world-class
fleet of ocean going vessels ensuring
high quality performance and a service
you can trust.
Find out more about us at
www.thenamaris.com.
Thenamaris. How shipping should be.
P97-108_COMMS.indd 106
29/01/2014 14:09
PEOPLE
manning problems:
some things never change
The year is 1734 and in Mr Jemsons coffee house (formerly owned by the late Edward Lloyd) alongside
the Royal Exchange, merchants, shipmasters and insurers, along with various brokers and stock-jobbers
are undertaking what, 280 years on, we would describe as networking. Lloyds List is being passed
around and attracting comment
By Michael Grey, former editor, Lloyds List
T is a loud, smoky, club-like atmosphere. The conversations

are about cargo, ships, the political situation, the severity
of the winter gales which have caused such losses, the
depredations of the French and Spanish privateers and the
new atrocities of the north African corsairs which have made
Mediterranean trading so problematical. Bargains are being
struck, deals are being done.
But, day in, day out, there is also one topic of conversation
which never seems to change the endless difficulty, in a
nation which likes to think of itself as aspiring to challenge
the great maritime empires of Spain and Portugal, of finding
sufficient seafarers to man its ships. The shipping industry
is growing fast; despite all the risks, there is a rich return
from ships sailing under letters of marque, vessels on the
triangular trades to the slave coasts of West Africa, the West
Indies and north American colonies and home to england, the
growing trade to the Levant.
There is real growth in the east coast coal trade as the
northern mines develop their markets. Indeed such was the
problem of manning both merchantmen and the ships of the
navy that the navigation Acts have been amended to enable up
to three quarters of a merchant ships crew to be foreign. And
with every new outbreak of hostilities which causes the navy to
plunder the available manpower for its warships, the situation
becomes more critical. However, the numbers are counted (and
all statistics from that time are exceedingly inadequate) there
are just insufficient seafarers to go around.
Merchant seamen were, of course, volunteers, although
in the first half of the 18th century it is probable that the
choice between work as a poor agricultural labourer ashore
with periodic unemployment and starvation, compared to
pay and victuals as long as a sea voyage lasted, may have
been uncompromising alternatives. Fishing, the considerable
coasting trades in a nation with poor landside communications,
www.lloydslist.com
a long and poorly paid apprenticeship...

would provide the qualification for
a post as mate and eventually as
master.
and the craft employed in the rivers and estuaries also served
as nurseries for young men who could be persuaded into a job
that took them over the horizon and to foreign parts. For the
ambitious, those perhaps with some education, there was the
prospect of promotion, albeit after serving the long and poorly
paid apprenticeship which would provide the qualification for a
post as mate and eventually as master.
soldier, sailor
Seafarers of this era, indeed for the best part of another
century, with the country at war for longer than it was at peace,
were regarded as the total available labour force for both
the merchant service and the navy. They were completely
interchangeable and while seamen might reasonably volunteer
to serve in merchant ships, where wages and conditions,
depending on trade and the type of ship were usually better and
more regular than that aboard a ship of war, they would have
little choice when the navy was looking to man its ships.
With each successive period of hostilities, until the long
Victorian peace was well-established, the brutalities of the
press gangs saw the navy and the merchant service at daggers
drawn, the prime seamen of the latter service the core which
enabled the Royal navy to become all-conquering in the wars
against the French and Spanish. This was the flexible human
29
29/01/2014 12:54
PEOPLE
Seafaring has changed, but finding the right crew remains a challenge
resource which, supplemented by landsmen dragged from their

homes, which the navy would fashion into a hugely effective
maritime force, which, if peace should break out, could be
thrown onto the beach almost overnight.
And while thoughtful senior naval officers struggled to
conceive something better than the press gang to man their
ships, successive governments, which grudged proper pay
and the cost of decent victuals, frustrated all their efforts. So
in coastal towns, in port cities and in the narrow seas, where
homebound merchant ships might be raided for their crews,
the press gangs patrolled, forced to quite literally, fight for their
manpower, from the unwilling candidates. even a respectable
shipowner and member of Lloyds found himself collared by the
press in east London, although he was fortunate to be rescued
by a sympathetic crowd. Watermen, fishermen, children,
cripples anyone in his cups or out after dark was liable to be
seized, flung aboard the receiving tender and shipped out to the
fleet.
Sailing ship seamen of that era might have been regarded as
one step removed from savages by polite society, but they were
highly capable craftsmen, able to work their ships in whatever
trade they were in, while more than able to defend them with
whatever arms they had available. The crew of a merchantman
30
could fight off pirates and privateers, while there were instances
where hostile warships were beaten off by a determined,
wellled complement. Their resourcefulness was legendary
records tell us how shipwrecked crews fashioned smaller craft
out of the wreckage of their ships and sailed hundreds of miles
to safety. A good seaman knew his ropes and whether serving
on a coaling brig, Atlantic packet, Indiaman, or ship of the line,
would swiftly adjust to his surroundings.
dangerous travel
It is important to recall that this was a brutal and dangerous
age both ashore and afloat, but life at sea was undoubtedly
more hazardous that that ashore. On long voyages, disease
and sickness could cut swathes through a crew. Ignorance of
the causes of diseases like scurvy or malaria, the poor hygiene,
insanitary conditions, disgraceful food, climaterelated
illnesses were all hazards to be faced alongside those from
storms and tempests, fire and foe. Seafaring has remained a
dangerous occupation, with many of these hazards persisting
into the 20th century.
What training there was available in the 18th century was
largely done afloat, apprentices bound to their master for
seven years, gradually picking up the skills of navigation and
www.lloydslist.com
29/01/2014 12:54
PEOPLE
seamanship, while providing the ship with cheap labour. There

were some schools teaching navigation and mathematics in the
major ports, but the amount of book learning required, even
of a shipmaster, was limited.
nevertheless, the competent shipmaster was more than
capable of commercially trading his ship, while commanding it.
More often than not, he would be a part owner of his own, and
often other vessels. A lucky, competent shipmaster,with the
right connections, could become wealthy during his working
life. Indeed, in large ocean-going ships like those operated
by the east India company, as the British empire extended
its reach, a shipmaster could achieve great wealth and social
advancement. These were, perhaps, the liners of their day,
the very peak of the merchant service and those who sailed in
them knew that they were almost a breed apart from the lesser
beings who inhabited the ships which constituted the majority.
It was after the long wars with the French had concluded, that
rather more technical innovation started to be seen at sea and
with it changes to the seafaring society. The first steamships
chiefly operated as tugs in the rivers, were a portent of things
to come, while the various crafts of engineering and science
started to exert their influence. Iron shipbuilding first emerged,
although the final flowering of commercial sail, with the fine
lined clippers, Blackwall frigates and other large, tall ships
would test the skills of the sailing ship seaman for another
several generations.
Technological advance demanded new skills and more
regulation, with the arrival of certificates of competency and
the compulsory registration of merchant seamen. A less casual
attitude to crews and crewing gradually came about with the
requirement for all masters to lodge lists of their crew members
with the customs, before departure. For the first time, after the
1835 act which brought the Register of Shipping and Seamen
into being, there was a reasonable assessment of the numbers
of seafarers 175,417 were registered in 1838.
tHe plimsoll line

Life was still hazardous, even after the Board of Trade started to
take an interest in the safety of ships and seafarers. The reforms
demanded by Samuel Plimsoll, who was described as the
seamens friend by Victorian balladeers after his campaigns
against coffin ships, took time to implement and were often
resisted by owners. But the age of mass migration to the new
World, to Australia and the colonies meant that there were
more passengers at sea than ever before, and their fate, when
involved with shipwreck , meant that public attention, for the
first time ever, was focussed on marine safety, and its obvious
need for improvement.
There might be more precise navigation, with reliable means
of establishing longitude and more aids to navigation and better
charts, but there was still severe weather to contend with. Sailing
ships, usually undermanned were seen as particularly dangerous
in a new world where the relative safety of mechanical propulsion
www.lloydslist.com
Reform-minded Plimsoll was the seafarers friend

was a comparator. In 1881 there were 147 vessels posted as
missing, while in the 20 years up to the final year of the old
century, 11,000 seamen were lost in 1,153 missing British ships.
cHanging times
The power-driven ship was, however, to revolutionise the lives
of seafarers, of whatever rank, although they did not usher
in any huge improvement in their status as citizens or their
pay and conditions. The merchant service was an industry
increasingly of contrasts. For every luxury liner captain in his
plush suite, there were hundreds of toilers shovelling coal
into the furnaces below, stewards hot-bunking in squalid
spaces beneath the waterline. There might be fine elite
liner companies offering a decent career for professional
officers and contract ratings, but many more rough and
ready trampship operations, where the conditions would be
rudimentary, the feeding basic and the water rationed. And
when seamens unions gradually squeezed the wages and
conditions above what the owners were prepared to pay,
there came the flag of convenience and the economies of a
globalised workforce, from which crews could be obtained.
For the most part, the casual labour which obtained when our
story began in 1734 is maintained today, invariably victims of
the peaks and troughs in demand for their services, then as
now, from one year to the next, whether in war or in peace,
boom or slump.
31
29/01/2014 12:54
PEOPLE
But from the middle of the 20th century, if the nature of

seafaring, with its long voyages on a hostile and potential
deadly sea may not have materially altered, the arrival of
advanced technology and the scaled economies of very
large ships have completely changed the skills required
by the modern seafarer. Up to the middle of the century,
navigation and seamanship as practiced aboard ships
would have been perfectly recognisable a century or more
earlier.
concern about an upcoming

manning crisis would never be
far from the lloyds list headlines.
flexible friends
True, mechanical propulsion had brought engineering
skills to sea, but seafarers still worked with rope and
wire, with wood and canvas, with cargo and the daily
tasks of maintaining the fabric of a ship. In extremis, they
still proved remarkably resourceful, rigging jury rudders,
plugging leaks, even on a number of occasions hoisting
sails on disabled vessels broken down in mid-ocean. They
could still carry out anchors suspended between boats to
kedge off a grounded ship, undertake repairs with spars of
wood and canvas.
They also remained very flexible folk, moving freely from ship
to ship, taking the seamans adage different ships- different
long splices in their stride, their skills easily transferable from
the liners to the coasters, the tankers to the tugs.
But from the middle of the 20th century, technology
and scale economies both intruded into the seafarers
life. Over a relatively short period, automation, clever
equipment, new materials and above all, far bigger and
more specialised ships were to change the seafarers life
dramatically. The ability of the seafarer to intervene was
diminished by the sheer size of the ships that were to be
operated, while the sorts of skills which were now required
were increasingly tailored to the type of ship and its trade.
Where a seafarers skills might once have revolved around
his ability to squeeze the most out of the prevailing winds,
henceforth it would be concentrated upon the patient
monitoring of increasingly sophisticated machinery.
from the great global bazaar of 1.5 million people

describing themselves as seafarers would help to keep
these costs under control. nevertheless concern about an
upcoming manning crisis would never be far from the
Lloyds List headlines.
So a group of ship operators meeting today under the
sort of circumstances those maritime industry folk met
with in that London coffee house in 1734 would, one might
surmise, be having much the same sort of conversation
as their predecessors. They would be talking of the
depredations of pirates and the unrealistic demands of
shippers, the price of port calls and the cost of stores and
keeping their ships profitably at sea. But they would also
be worrying, like their predecessors of the past 280 years,
about where their crews are coming from, complaining
about the reluctance of young people today to take up a
sea career, and from where the next generation is likely to
emerge. Some things never change. n
new skills
The 21st century seafarer would require skills with
mechanical and hydraulic equipment, familiarisation with
evolving procedures and compliance with regulation.
The value of the seafarer would be judged increasingly
by his or her specialist training and experience, with
segmented skills acquired during a career in specialised
tonnage. People of the 21st century would term those
who took their ships to sea, if they ever thought of them,
as the human element. They would rarely see them,
with their lives lived afloat, or in their brief port calls,
behind the high security fences. Their employers would
tend to consider them almost as a commodity, one of the
inescapable costs of ship operation. Intelligent shopping
32
The value of the seafarer would be judged increasingly by his or

her specialist training and experience
www.lloydslist.com
29/01/2014 12:54
PEOPLE
the flying angel story

The Mission to Seafarers has been supporting Seafarers for over 150 years
By Dr Ken Peters, director of justice and welfare,

Mission to Seafarers
young chaplain by the name of John Ashley was

passing through Bristol in 1835 when he stopped
to observe the fleet in the channel. It struck him
that there were hundreds of sailors on board
without access to a local priest and he decided to visit
the ships to offer help and support. This inspired more
chaplains to visit crew in other ports and, in 1856, it was
decided they would be named The Mission to Seamen, and
together they adopted the Flying Angel flag as a unifying
symbol. The Mission to Seamen is known today as The
Mission to Seafarers.
The change from sail to steam in the late 1800s meant that
ships could now dock at quaysides and this created a need
for somewhere for seafarers to go ashore. In response, the
Mission opened port-based welfare centres so that the men
could be offered refreshments, reading and games rooms,
cheap accommodation and a chapel. But above all it gave the
men a place to relax ashore with a friendly and trusted team of
volunteers who could offer advice and help if needed.
crimping was a notorious

practice that involved the use of
intimidation and violence.
Where there were no such centres seafarers were often

left at the mercy of crimps. crimping was a notorious
practice that involved the use of intimidation and violence by
criminals, which flourished as a result of the way seafarers
were paid, a few days after docking. crimps provided sailors
with money, alcohol, food and lodgings under the guise of
hospitality and the bill usually exhausted the seafarers pay
packet. Stopping the crimps became a determined campaign
of The Mission to Seafarers. It fought passionately against
crimping and was an important step in ensuring bad practice
was stamped out, significantly improving the welfare of
seafarers in the 19th century.
Hard times
Eirene, the mission ship purchased in 1843
www.lloydslist.com
The Mission to Seafarers has continued to support seafarers

through hard times. By the time of the outbreak of the First
World War, there were 27 Mission port stations in Britain
and 24 overseas, to meet wartime demand. The work of
the Belfast Flying Angel club was typical of the spirit with
which the Mission responded to seafarers needs during the
Second World War. In canteens entirely staffed by volunteers,
four and a half million meals were served, and although it
was twice damaged by enemy action and once by fire, the
canteens closed for only six days during the six years of war.
By 1956, when the Mission celebrated its centenary, it had
centres in 81 ports.
In the post-war period to the 1980s changes began to
take place in the shipping industry which had enormous
repercussions for both seafarers and for the Mission. Ships
became larger and more specialised and containerisation
33
29/01/2014 12:54
PEOPLE
Mission to Seafarers campaigns internationally for better working conditions at sea

became widespread. One result of these changes was
much quicker turnaround times, which meant seafarers
spent much less time in port and longer periods at sea. The
Missions global ship-visiting programme became more and
more vital to bring news and support on board.
The plight of seafarers continued to be the focus for
Mission teams, who not only worked hard to help with
problems such as non-payment of wages and unsafe
conditions, but started to campaign internationally at the
highest levels for improved working conditions, just as their
forebears had a century before.
In 2000, The Mission to Seamen changed its name to
The Mission to Seafarers, the new name reflecting what the
Mission had always been in reality a society which cares for
all who earn their living at sea, regardless of gender, belief,
nationality or rank.
bill of rigHts
In 2013 the Maritime Labour convention came into force,
which the Mission has tirelessly campaigned for in the
last 10 years. Known as the bill of rights for seafarers,
it brings into law basic rights for crews, such as proper
contracts and access to medical treatment and port-based
welfare facilities.
The picture in the 21st century continues to be complex.
The financial crisis and global downturn has caused a
second great depression in shipping and more pressure
34
despite laudable improvements

in health and safety, in 2012 more
than 1,000 passengers and crew
died at sea.
for the worlds seafarers. Despite laudable improvements

in health and safety, in 2012 more than 1,000 passengers
and crew died at sea. Seafaring remains one of the worlds
most dangerous occupations and the need for the Missions
support is as great today as when we were founded.
The Mission is now present in 260 ports in 71 countries,
to ensure the wellbeing of over 1.3 million crewmen
and women and looks forward to celebrating its 160th
anniversary in 2016.
The Mission to Seafarers is deeply grateful for all the
support it has received from Lloyds List through its well
respected publications, and looks forward to working together
for the benefit of crews in this new digital age. congratulations
on an historic achievement. n
For more information on The Mission to Seafarers please go
to www.missiontoseafarers.org.
www.lloydslist.com
29/01/2014 12:54
PEOPLE
the generation game

Why the current crop of shipowners is pushing forward with old values and a new vision
HIPPInG is a long-term business based on

relationships, trust and generational investment
strategies.
continuity is vital, so for all the talk of asset
plays and shortterm speculative investment, it is perhaps
not surprising that the maritime sector is still dominated by
family dynasties.
From privately owned, patriarch-led powerhouses to the
corporate colossuses, shipping remains uniquely populated
by the sons and daughters of shipowners.
Shipping, it seems, is in the blood.
The transition from one generation to the next in any
business can be difficult. While everyone hopes for a process
that reinvigorates tradition with fresh thinking, technical
know-how and modern market nous, it can equally end up
weakening a business and put it on a journey to extinction.
In most other sectors it is estimated that around 70% of
businesses do not make it through a second generation of
leadership. Few make it to three.
Shipping somehow seems different and special because
of this.
succession planning
Lloyds List has been looking at this issue for decades and
it seems clear to us now that there is no onesizefitsall
policy when it comes to succession planning in shipping.
There are those who have trained within the family, ready to
take on the mantle when the time arrives and there are many
who have set out by themselves with their own shipping
ventures. But the sheer volume of offspring choosing to
follow the family line and stay in shipping is a testament
to the vibrant and compelling nature of shipping as a truly
global career brimming with opportunity.
So addictive is it that the next generation is often left
waiting for the previous generation to loosen its grip a little.
Retirement is apparently something that happens in other
industries, but not in shipping.
When we dedicated an entire supplement to the next
shipping generation back in 2012, the upstart examples
www.lloydslist.com
Training is crucial for the next shipping generation
the next generation flag bearers

boast an impressively diverse range
of backgrounds.
we picked represented only a snapshot of the current crop
of talent coming through the ranks. Since then, more have
emerged and it seems clear that the next generation flag
bearers boast an impressively diverse range of backgrounds,
education and strategies, proving that diversity is alive and
well when it comes to shippings family businesses.
every generation looks to the last for direction and
lessons learned. The current batch of industry leaders has
more than enough to chew on as it deliberates what went
wrong and forges its own path ahead.
It is difficult to characterise generational traits amid
a diverse array of individuals and companies that we
have picked for this report, but it seem fair to conclude
that the current crop of young leaders has become more
sophisticated than its predecessors.
They appear more risk aware, although it should be noted
that is very different from being risk averse. This generation has
35
29/01/2014 12:54
PEOPLE
Shipping sisters: Mariella, Manuela and Alessandra Bottiglieri. The three daughters represent the sixth generation of
Bottiglieris in shipping
seen the extremes that a shipping cycle has to offer and risk
management is high on the agenda, even as it searches for the
opportunities that history tells it must be waiting at the bottom.
They are more concerned with corporate governance and
are certainly more transparent than the last generation who
gave up information as if it were their market share.
a different market
Many of those currently on our radar cite the need to focus
on low leverage, strong cash flows and the ability to survive
downturns. Ironically it is the impatient young upstarts that
are taking that long-term outlook.
While the fundamentals of shipping remain, the next
generation will lead an entirely different market that is driven
by new political realities and a rapidly changing global
economic and regulatory agenda.
Perhaps even more significantly they enter an industry on
the cusp of a technical generational shift driven by fuel costs
and the need to rethink much of the global supply chain in
search of efficiencies.
But for all their attempts to differentiate themselves from
the previous generation, many still cite the old values of hard
work, integrity and loyalty as the guiding principles for any
modern business.
36
In a highly cyclical industry, it pays to have a tangible

reminder of what has worked and what has not. Family
businesses tend to have long memories, a fact that can
be an advantage just as it can weigh heavily on those who
inherit it.
There is something special about shipping that only
insiders can understand. People have a genuine passion
for it that you do not tend to see in quite the same way
elsewhere. For the shipping dynasties, that feeling is
intensified.
While the weight of expectation can be unreasonably
high for some, the power that a family business wields can
be highly advantageous. When successfully pulling in the
same direction, families are more nimble in their decisionmaking than companies that have to convince shareholders
and boards. They can also make long-term decisions without
concern for quarterly dividends, bound in the knowledge that
eventually they will come out ahead.
But for all their advantages, the continued success
of the shipping dynasties is by no means guaranteed.
While success can often breed success, business skills
are not genetic. Sound succession planning is as much
about finding the right talent in family businesses as it is
anywhere else. n
www.lloydslist.com
29/01/2014 12:54
PEOPLE
advising the next generation

Safety, security and the environment will become increasingly important
By Dr Sadan Kaptanoglu, director, Kaptonoglu Shipping
F I were to advise the next generation, from my personal

perspective and lessons learned by my own company, I
would say the secret of success is looking into the future and
keeping a close eye on legislative developments, particularly
with regard to crewing issues and emissions. While safety and
security will remain key issues, environmental aspects will gain,
if not equal, more significance.
A review of recent publications and the International
Maritime Organizations own reports gives a clear view of
the roadmap for reducing the marine engine emissions
in the near future. The central and north America coastal
areas are now almost all an emission control Area and it is
expected that coasts of Mexico, Alaska, Singapore, Hong
Kong, South Korea, Australia, the Black Sea, Mediterranean
Sea and Tokyo Bay may consider becoming ecAs. What
is significant is that these constitute 90% of all shipping
routes so the implications are serious.
The IMO has devoted significant time and effort in
order to regulate shippings energy efficiency and thereby
limit the marine emissions; in addition to the energy
efficiency Design Index there also the Ship energy efficiency
Management Plan with its energy efficiency Operational

Index. The Regulations on energy efficiency relating to the
eeDI and SeeMP entered into force on 1st January 2013
within a new chapter 4 of MARPOL Annex VI.
It is important to note that the IMO has also been
working on a number of market-based measures for the
marine industry. The deliberations on such measures
are not progressing and some IMO members are now
suggesting to concentrate on a first phase of collecting data
to establish an inventory of cO2 emissions from shipping.
The great take away for industry in relation to energy
efficiency is that it makes good business sense. every ton of
bunkers saved is less emission of cO2 and less dollar spent.
opportunities and tHreats for tHe industry

Shipping is a global business and opportunities and threats
often come hand-in-hand. There are so many opportunities
and threats. The greatest threat to shipping is unfair
competition and greatest opportunities are new good practices
and technologies that can help the industry to become more
competitive. That is why shipowners need to support industry
organisations like BIMcO, which fights for free access to
markets and fair competition between ships of all flags.
Applications of lean techniques and policy deployment
approaches have been known in the aerospace and
automotive industries for some time but are relatively new in
the shipping industry. Lean is an opportunity that needs to be
harnessed as it is about the use of resources in most effective
(doing the right things) and efficient (doing things right)
manner. The eeDI can be seen as a threat and an opportunity.
Going back the last 279 years of the Lloyds List, one must
remember that this is the first time that an international piece
of legislation (eeDI) has been introduced which put in place
a constrain on the ability to build ships with unlimited speed
reserves. This may have far reaching consequences.
advice to tHe next generation of

lloyds list readers
Technology will make shipping more competitive
www.lloydslist.com
My advice is to keep your last paper copy of the Lloyds List

somewhere safe and follow the online publication. Make sure
37
29/01/2014 12:54
PEOPLE
Shipowners must make judgements which could make the difference between survival and sudden death
you have a friendly bank which is a listening bank at times
of need. You need one or two good lawyers but above all get
yourself educated and learn to learn fast. At the end you have
to make judgements which could at times make the difference
between your companys survival and sudden death.
we cannot rely on others

to solve our problems, we must
take the lead.
innovation in sHipping
Innovation is about doing business not the usual way.
You have sometimes to put yourself out of the box and not
rely on conventional wisdom only. Shipping is a story of
globalisation and efficient, reliable trade over many years
and is littered with innovative advances in technology,
efficiencies and new business models. So what happens next
and where should a company focus its efforts in the future?
The future in my view is innovation, specifically through
maximisation and optimisation. Developing future maps for
the companies and identifying the resources needed. Then to
seek knowledge through for instance eU funded projects or
specific collaborative research to address a particular need.
We recently established a european platform (www.marifuture.
org) and set up a R&D consortia to identify problems areas and
future needs. We have some 30 transnational partnerships
now each with specific set of tasks seeking either to identify a
38
deficiency or resolving a problem we are facing or likely to face

in the future. We cannot rely on others to solve our problems,
we must take the lead.
Future is also knowledge about what to expect. We need
to see into the future and assess the demand for ships and
shipping services. It is important to project into the future
and study trends. Shipowners are in a unique position with
an implicit ability to control their own destiny by controlling
the supply of ships. Often however reality shows that
market forces prevail as the ultimate regulator of supply
and demand is the shipping industry itself. n
www.lloydslist.com
29/01/2014 12:54
A
sm
y
p
O
p
g
G
R
a
Tu
ktx_sb_210x285_SHIPPING.pdf 1 27/9/2013 3:47:53
29/01/2014 12:54
infLuEnTiaL PEOPLE
the top 10 most influential people

eDWARD LLOYD
FASHIOnS come and go; the current vogue for coffee shop
chains such as Starbucks and costa was matched by a similar
craze in Restoration London. And for seafarers, merchants and
shipowners, Lloyds coffee House in Lombard Street was the
venue of choice for convivial socialising and the conduct of
business alike.
Proprietor edward Lloyd was born around 1648, probably
in canterbury, and as far as can be ascertained, set up the
establishment somewhere around 1688, on premises near the
Tower of London. Three years later, it had moved to the location for
which it became better known.
The MacBook Pro still being somewhat in the future, the reading
matter of choice for the exclusively male clientele was Lloyds
news, a single sheet that combined a few general news stories
with a record of shipping movements.
That publication was closed by government decree in 1696, and

Lloyd himself died in February 1713, unaware of how profoundly
his modest ventures had sown the seeds for the future of so many
major businesses that thrive to this day.
Lloyds List followed in 1734, Lloyds Register in 1760, and Lloyds
of London in 1774. Germanischer Lloyd, Royal nedlloyd and HapagLloyd were all named after this pioneering man.
MALcOM McLeAn
THIS year marks the centenary of the birth of the man who
invented containerisation, whose legacy is extensively
documented in Marc Levinsons excellent book The Box.
Malcom Purcell McLean christened Malcolm by his parents,
but choosing as an adult to drop the l and revert to traditional
Scottish spelling was born in Maxton, north carolina, in 1913.
With only a high school education, he started work pumping gas
before saving enough money to buy a truck and launch an ownerdriver trucking business with two siblings.
Within two decades, the fleet had grown to 1,770, making it the
second-largest trucking concern in the US. In 1955, MacLean sold
out for $25m and bought a couple of shipping companies with
the cash.
The following year, backed by a $500m loan [waiting for Dave to
correct figure], he bought two World War II surplus navy tankers
and converted them to carry containers above and below deck.
Although there had been earlier flirtations with this concept, this
development is widely held to mark the birth of containerisation
in its modern form.
Sea-Land, as McLeans company became known, was
eventually swallowed up by Maersk. Other business ventures
some successful, some not followed before McLean died
in 2001.
www.lloydslist.com
41
29/01/2014 12:54
infLuEnTiaL PEOPLE
LORD IncHcAPe
JAMeS Lyle Mackay personified the British shipping industry in the
decades when the British empire ruled a quarter of the planet and
the make-up of the world fleet reflected that fact.
Between 1913 and his death in 1932, he served as chairman of
both the British India Steam navigation co and the Peninsular and
Oriental Steam navigation co, major carriers of cargo, mail and
people alike prior to the age of air travel.
elevated to the peerage as Lord Inchcape in 1911, he gave his
adopted name to what is today Inchcape Shipping Services, one
the worlds largest agency chains, as well as the entirely separate
automotive retailer Inchcape.
If that was not enough, he was also a vice-president of the
Suez canal co and director of the Anglo-Persian Oil, now BP,
and national Provincial Bank, a predecessor of Royal Bank of
Scotland.
Born in Arbroath in 1856, the shipmasters son took a job with
the owners of BI in calcutta in 1874. He rose up the ranks and
eventually inherited the company.
But his nomination as viceroy was scuppered by prime
minister Herbert Asquith on account of his extensive
commercial interests in India, and the title came by way of
compensation.
ALBeRT BALLIn
SOMe 5.5m Germans emigrated to the US in the years prior to
1914, the majority carried across the Atlantic by the Hamburg
Amerikanische Paketfahrt Actien-Gesellschaft, at that time the
largest shipping company in the world.
The Hapag element in Hapag-Lloyd derives from the acronym,
although the company was known to english speakers as
Hamburg America Line.
At its peak, it was led by Albert Ballin, who born in 1857 as the
son of a man who owned an immigration agency. Taking over the
business on his fathers death, he set up an independent shipping
line to facilitate passage and to carry cargo on the way back.
This bought him to Hamburg Americas attention, and it hired
him as director in 1886, despite the anti-Semitic prejudice
faced by Jews in Wilhelmine Germany. Within five years, he had
inaugurated the concept of the modern cruise holiday, to great
commercial success.
Tragically, he killed himself two days before the armistice that
ended world war one, apparently fearful that the companys fleet
would be confiscated, which did in fact happen.
42
But his name lives on in the shape of the Albert Ballin consortium,
the Hamburg state government-led vehicle that is now the major
shareholder in Hapag-Lloyd.
www.lloydslist.com
29/01/2014 12:54
PEOPLE
infLuEnTiaL
PEOPLE
SIR SAMUeL cUnARD

SAM cunard, as he was known to his friends, was born in canada
in 1787 after his German Quaker father and Irish catholic mother
fled the American war of independence as loyalists to the crown.
The cunards prospered in their new home, with interests in
timber, coal, iron, whaling and shipping, and Sam joined the
family business as a young man, before fighting for Britain against
the fledgling USA in 1812.
He later went to live in the UK, and with others won the lucrative
contract to carry transatlantic mail in 1839, founding the British
and north American Royal Mail Steam-Packet co to operate paddle
steamers on a Liverpool-Halifax-Boston rotation.
More than a decade after Sams death in 1865, it was reorganised as
cunard Steamship and went on to dominate the route, taking over
competitors such as White Star Line and operating such famous
vessels as Queen Mary, Queen elizabeth and Queen elizabeth II.
But all that is left of his endeavours is the brand name cunard
Line, now part of the carnival cruise operation.
Sam cunard had nine children by his wife Susan, and the family
was socially prominent for several generations. Queen Victoria
created him baronet in 1859.
ALFReD HOLT
But after a slump in the railway industry, he joined brother

Georges Lampart and Holt Line in 1851, and began to make his
name as a marine engineer.
He also dabbled in owning coal carrier ships, insisting that their
funnels be painted powder blue, topped by a black band.
The breakthrough came in 1864, when he perfected a twocylinder compound tandem engine that provided real speed and
fuel economy advantages.
Holt cashed in by founding the Ocean Steam Ship co to trade with
the Far east via the cape of Good Hope the following year.
But both in popular parlance and for marketing purposes, Ocean
was known universally as Blue Funnel Line, on account of the ships
distinctive paint job.The company long outlived its founder, who
died in 1911.
It was one of the four British lines that formed the first UK
container carriers in 1969, prior to exiting shipping altogether
in 1989.
BORn in Liverpool in 1829 as the third of the five sons of a well-todo cotton broker, Alfred Holt started work at 16 as an apprentice
engineer for the Liverpool and Manchester Railway co.
www.lloydslist.com
In its current incarnation, it is a constituent part of logistics major

exel.
43
29/01/2014 12:54
infLuEnTiaL PEOPLE
DAnIeL LUDWIG
IF YOU are looking for a classic American dream-style tale of rags
to riches, look no further than Daniel Ludwig, who went from
humble beginnings to the top spot in the first-ever edition of the
Forbes 400 list of that countrys super-rich.
Born in 1897, his parents marriage broke up when he was still young,
and Ludwig left school early to earn a living in various entry level
shoreside shipping jobs in Port Arthur, Texas, where he lived with his
uncle and aunt.
Moving back to his native Michigan, by the age of 19 he was the
owner of ships trading on the Great Lakes.
national Bulk carriers went on to own 60 vessels, and after world
war two, Ludwig also moved into tankers, pioneering the use of
larger vessels. He subsequently diversified into oil refining, mining,
banking, cattle ranching, insurance, hotels and real estate.
In 1971, he founded the Ludwig Institute for cancer Research with
his international assets. To date, the Institute has committed over
$1.6bn to cancer research. Upon his death, Ludwig also gifted
his US-based holdings to Ludwig centers at six US institutions.
collectively this international community of scientists is referred
to as Ludwig cancer Research.
His private life was sometimes colourful, although his second marriage
to Gertrude, nicknamed Ginger, lasted until his death in 1992.
YUe-KOnG PAO
from the purchase of its first secondhand vessel in 1955 to become
the largest shipping company in the world by deadweight tonnage
within two decades.
Born in 1918 to an affluent family in ningbo, a port in precommunist china, he was already working in his fathers shoe
manufacturing business by 1931, and thereafter secured a trainee
role with a foreign insurance company. An arranged marriage at 20
provided a stable lifelong partner.
caught in the vicissitudes of chinas mid-twentieth century
history, he took his family to Hong Kong in 1949 and set up an
import/export business, often doing deals with china despite the
trade embargo imposed on account of the Korean War.YK called
the 1970s shipping downturn just right, selling up and diversifying
into terminals, real estate, retail, ferries and trams.
He retired from day-to-day running of his empire in 1986, handing
control of the shipping side to son-in-law Helmut Sohmen and
devoting himself to philanthropic activity.
SIR Yue-Kong Pao or simply YK to his intimates earns his place

on this list through founding World-Wide Shipping, which went
44
He died in 1991. Paos admirers include former British prime

minister Margaret Thatcher, who wrote the foreword of his
biography.
www.lloydslist.com
29/01/2014 12:54
infLuEnTiaL PEOPLE
FeRDInAnD De LeSSePS
FeRDInAnD Marie, Vicompte de Lesseps, has gone down in
maritime history as the man who both developed the Suez canal
and then started work on a Panama canal project that was never
completed.
Born in Versailles in 1805, into a French aristocracy that had just
lived through the turmoil of revolution, his early years were spent
in Italy, where his father served as a diplomat. He entered the
same trade himself, acting as assistant vice-consul in Lisbon and
then Tunis in the 1820s.
In 1832, he was appointed fully fledged vice-consul in Alexandria
in egypt, at which point he realised the potential for a waterway
linking the Mediterranean with the Red Sea.
The idea stayed dormant until his retirement, and on the
accession of Said Pasha in 1854, he secured the concession. The
canal was officially opened 15 years later.
Well into his seventies, he was appointed head of a company
that sought to repeat the engineering feat in central America. But
hampered from the get-go by a difficult terrain, insufficient capital
and the depredations of malaria and yellow fever, the scheme was
aborted in 1888.
De Lesseps died in 1894 and is buried in Paris famous Pre

Lachaise cemetery.
ARISTOTLe OnASSIS
Aristotle Socrates Onassis was born in what is now Turkey in

1906, and was left a refugee after the Greco-Turkish war of 191922. Hightailing it for Argentina, he got a job as a telephone
operator, and made his first million by launching a brand of
cigarettes made from smuggled tobacco.
In 1932, one of the worst years of the depression, he was able
to acquire six ships at a fraction of their former value, and never
looked back.
But his shipping activities peaked after world war two, when he
acquired 23 Liberty ships and secured long-term timecharters with
US oil majors, often recouping his outlay in a matter of months
and operating the vessels profitably for as long as he could
thereafter.
First wife Athina Livanos, herself a scion of a famous shipping
dynasty, filed for divorce after discovering her husband in
flagrante with Maria callas, who was also married. But Onassis
dropped her for second wife Jackie Kennedy, widow of the US
president.
THe most famous Greek shipowner of the twentieth century
enjoyed international renown for his successes in his two chosen
areas of endeavour; operating tankers and bedding a succession
of the most beautiful women on the planet.
www.lloydslist.com
There were reputedly many other conquests, their affections

not infrequently purchased with diamonds. Onassis died in
1975.
45
29/01/2014 12:54
PEOPLE
ten steps towards a better industry

The human element remains the critical factor
By Roberto Giorgi, president, V.Ships
Hen you are close to reaching the end of your

executive career, it is normal to reflect on
moments of major changes that affect how the
business is operated. In my experience, the
most significant development took place in 1990 when the
Oil Pollution Act of America hit like a stone the heads of all
the owners and operators of tanker vessels.
It was of particular importance to me due to the fact
that I was based in new York managing a small fleet of
tankers. We, as a team, soon realised and agreed that
the best place to manage this new, highest risk profile
tonnage, was from the US as nobody outside the country
fully understood the huge impact that this new law was
going to have.
The impact of OPA was immediate and since that time
I believe that overall the quality of vessel operations has
progressed, with tanker owners becoming more professional.
However, I am also of the belief that there are still a lot of work
to be done if we want to improve the quality of this industry.
As a ship manager for all of my career, I have always
believed in the importance of the human element, the
as a ship manager for all of my

career, i have always believed in the
importance of the human element.
need to promote a positive image and in the importance

of securing a financially sound platform as the basis for
securing long-term sustainability.
Based on the above, there are to my mind 10 key actions
which, as someone who still is very passionate about our
industry, I would wish see implemented in the future.
While some people will see some if not all of these as a
too aspirational, unrealistic and too simplistic, they are
nonetheless worthy of note.
1. First and foremost is an increase in officer cadet training. It is
invaluable to allow young people to put theory in practice by
providing the opportunity to learn directly on board the way
a vessels is operated. Allied to this is the need for incentives
for owners to build new ships with more cadet berths and
welfare space. Owners implementing this approach should
not be penalised by higher tonnage costs but receive some
financial benefits. I believe that is a matter for IMO to action.
2. Reinstating pride and respect for the seafarers especially

when they travel abroad. By way of example, airline
companies and immigration authorities can easily create
preferential fast tracks for the crew at the arrival points
and remove restrictions which limit their freedom to go
on shore leave.
Bridge and engineroom equipment needs to be standardised
46
3. We would enjoy more success if bridge and engine

equipment was standardised on the same basis as
the cockpit of an airplane. Standardisation of manual
equipment should also be promoted.
www.lloydslist.com
29/01/2014 12:54
PEOPLE
The United Nations must reinstate safety on the high seas
4. Perils at sea are already multiple without the threat

of piracy. The Un must reinstate the safety of the high
seas and secure the safe trade of commercial vessels.
Whatever needs to be done must not any longer be
a cost for the owners. The West Africa piracy threat
needs a different response. Un coastguard patrolling
the local coasts could be a solution.
5. countries that depend heavily on shipping should have a

strong government supporting the shipping sectors. It is
incredible that our industry is also invisible to some of the
politicians governing a country. Without a powerful and
informed political presence it is impossible to design and
implement a strong agenda in all matters pertaining to
sustainable shipping.
6. We have still unresolved matters related to port of refuge,

pilotage liabilities, port discharging facilities. We need to
find resolutions that decrease the liabilities to the master
and consequently the vessels and owners. We should not
see another Prestige case.
7. The KPI project initiated by InterManager should

become an industry-wide initiative applied not only
to vessels owners but also to all the stakeholders of
our industry. More transparency from all the players
will match the criteria of establishing a one play field
ground.
www.lloydslist.com
we need to find resolutions

that decrease the liabilities to
the master and consequently the
vessels and owners.
8. How we can improve the image of our industry if every day

we have still misalignment and confrontation between the
various trade associations? If we want one voice for the
industry we need more united and cohesive approach.
9. Quality performance should be compensated properly. cargo

owners, traders and charterers should pay on the basis of
owners track records, quality and performance indicators.
10. As a final point, the industry should be rid off of players

that today do not achieve, due to their culture and their
performances, the level of excellence required to work
in this business. In this category are not excluded flag
administration, class societies, underwriters, crewing
agents not fit for duty.
Hopefully, these reflections offer some food for thought
which are tabled in the hope that the future of our industry
47
29/01/2014 12:54
people
Everything must change to stay the same

Shipping and publishing have changed but efficiency remains key
By Richard Sadler, chief executive, Lloyds Register
Loyds List and Lloyds Register, along with the

Lloyds insurance market, all emerged from the same
coffee house in the City of London. the practices
and institutions that emerged in London around 300
years ago continue to provide the foundations for modern
shipping. But how have times changed. We should celebrate
hundreds of years of shipping (although my Greek friends
are always reminding me that we should be celebrating
thousands of years of seaborne trade).
Most importantly however, we must look to the future.
the fact that Lloyds List is ceasing daily production of a
hardcopy newspaper is significant news. the bigger story is
the continuing transformation of our industry. Lloyds Lists
transition to a purely digital world cannot please everyone; i
will miss my daily copy. yet, just as shipping is transforming,
and is not just the enabler of globalisation but also the
most globalised of industries, so Lloyds List has decided to
reposition itself in an ever more competitive and global world.
My own organisation is going through a transformation in
our continued evolution from being the original classification
society to a multi-industry compliance, assurance, risk and
technical consultancy services organisation. Change requires
difficult decisions. And we often can never know what the
impact of decisions made today will be on the future. thats

what keeps so many of us interested.
thE quEst for EfficiEncy

What doesnt change is the ultimate need for ever more
efficient shipping services. As we all know, without ships
there is no global trade. Progress has always been built on
shipping in that sense nothing changes.
But shipping has changed. it will always change to meet
that fundamentally unchanging need to move commodities
and finished products from where they are to where they are
needed.
thousands of years ago men went down to the sea to sail
and row small wooden craft. the vast steel ships of today
are the result of a rapid commercial and then engineering
renaissance that started in London in the 1700s. Now we are
going through another significant evolution as environmental
and efficiency needs, combined with technological progress
and understanding, are driving change.
Understanding the past, historians say, will help us plot
where we might be going. its important and interesting
to look at the past. But going backwards is not an option.
to stay in business, to remain relevant, we have to keep
changing.
i wish Lloyds List the very best in their digital future. n
Lloyds Register has been around nearly as long as Lloyds List
48
www.lloydslist.com
29/01/2014 18:57
PEOPLE
the secret of success in shipping

Timing and talent make succesful owners
By Harry Vafias, chief executive, StealthGas
HeRe is a perception that in order to be successful

in shipping there must be a secret or a mysterious
recipe. I dont like being the bearer of bad news but
there is no such thing.
If you look over the years at the people that succeeded
in our industry you will find out that they had basically two
things in common. One was great timing, because timing
in shipping is crucial, for example, when you buy a vessel,
when you sell it, when you order or when you fix it on a long
or short time-charter.
The second was guts. This business isnt for the
fainthearted nor for the people who dont want to take risks.
Shipping appeals to the people who are adventurous, to the
people that want to bet it all and to the people that are not
afraid to fall down and fight back to get up again.
The people that got it absolutely right were the ones
that made immense fortunes, built up huge fleets and will
be forever engraved in shipping history. Some of them are
the golden Greeks (niarchos, Onassis, costas Laimos) but
also YK Pao and most recently the Ofers, Fredriksen and
Angelicoussis.
the people that got it absolutely

right were the ones that made
immense fortunes, built up huge
fleets and will be forever engraved
in shipping history.
A very important thing to remember is that in order to

achieve greatness in shipping you dont have to have big
amounts of equity, how many stories have we heard about
captains that became big shipowners or even ex-employees
that started with a small tweendecker and ended up
controlling huge mixed fleets.
Moreover, nowadays there are so many private equity
funds out there trying to pump money into shipping that a
lot of smaller owners can become really big if they partner
up with any of these, mainly US-based, funds.
Hard work, consistency and luck will get you a very long
way in this industry. n
Private equity is pumping money into shipping
www.lloydslist.com
49
29/01/2014 12:55
PEOPLE
wista-uk: a journey of four decades

Women are playing an increasingly important role in the industry
By Maria Dixon, president, WISTA-UK
n the summer of 1992 I was head of shipping at the

consulate of Panama in London. Many shipping old
timers will remember that small consulate building on
the corner of Tudor Street and Whitefriars Street, just
across from the then offices of the Daily Mail newspaper.
At the time, Lloyds List was our lighthouse in the sea
of shipping. Those years were always busy for shipping
registries, and our office was no exception.
One day I took all the unread Lloyds List back editions
I had pending and went to have a late lunch break in the
hairdressers in Fleet Street. That day was life-changing
for me. catching up with my reading, I came across an
article about women in shipping in the UK and Womens
International Shipping & Trading Association, WISTA.
When I returned to my office I telephoned Jean Atkinson,
WISTA secretary at the time, and she welcomed me as a
member.
The rest is history. I joined the UK delegation attending
the 1992 conference in copenhagen; then I worked
with WISTA-UK in the organising the 1993 conference in
Liverpool. We were about 200 members worldwide.
I have now been a member for 21 years, and president
of WISTA-UK since 2008. Perhaps the proudest moment
wista emerged from unlikely

beginnings nearly 40 years ago,
when a small group of women tanker
brokers met for a christmas lunch.
for me personally was when I made the welcome address

at the 2009 WISTA International conference in the
plenary assembly hall of the International Maritime
Organization. I could not stop myself from exclaiming:
This is a dream come true! and it was, because
it signalled, at the highest maritime level, serious
recognition of WISTA.
The evolution from Ladies in Shipping to WISTA
WISTA emerged from unlikely beginnings nearly 40 years
ago, when a small group of women tanker brokers met
for a christmas lunch. Those women has a desire to bring
together female executives from all over the globe to share
experiences and for mutual support has resulted in todays
strong WISTA International, with 33 member countries and
1,800 individual executives and managers. In the last two
years, WISTA has launched in china, India, Argentina and
Russia.
lloyds list & wista
Today, WISTA represents 1,800 women in shipping
50
Lloyds List has helped WISTA so much over the years, and I
am grateful to the paper and everyone there, who in difficult
times, when WISTA was almost unknown among the wider
shipping public, helped us into the limelight!
Lloyds List has reported on our development as an
association, about our members and about our companies,
and this is a credit to the editors over the years and their
team of professionals that had faith in us and brought to the
readers knowledge of our efforts, news and successes.
www.lloydslist.com
29/01/2014 12:55
PEOPLE
One of the biggest engagements between Lloyds

List and ourselves was through the five or six annual
supplements entitled Women in Shipping.
2014 anniversary year tHe ruby anniversary

To mark the historic milestone, WISTA-UK is planning a variety
of events, such as a Forum during Junes Liverpool Shipping
Week, our traditional Grand Debate and a special party for
our X-mas in July dinner. In the international arena, we are
going all out to make a big impression with the 2014 WISTA
International conference, from October 8-10 in Limassol. This
will be WISTAs major 40th anniversary celebration, and the
conference will have the theme Shipping connects.
The first such conference took place in Hamburg in
1981 and as WISTA cyprus president Despina Panayiotou
Theodosiou has said: Since then the WISTA community has
grown substantially through the promotion of networking and
connecting with other organisations worldwide, exchange of
professional experiences and learning opportunities.
As always the conference will have top-level speakers
and workshops on up-to-the-minute topics in the maritime
and associated industries, and in the words of Despina the
event will be a great opportunity for connecting people,
organisations, nations, generations, genders, distances
and cultures.
wistas 2014 conference will be a

great opportunity for connecting
people, organisations, nations,
generations, genders, distances and
cultures.
our ambassadors
Reading about WISTA-UK through the pages of Lloyds List
in 1992 was definitely a turning point in my career. My
thanks to all the editors who have so brilliantly produced
a wonderful newspaper down the centuries, and we trust
that the big decision to go all-digital will help take us to
further success in the future.
Lloyds List is a companion in our shipping lives. Thank
You. n
WISTA-UK summer gathering in central London; a group of members met in July for the now traditional Christmas in July dinner
www.lloydslist.com
51
29/01/2014 12:55
people
Greeks long voyage to blue-chip status

The modern rise of Greek shipping is a master-class in adaptability
By Nigel Lowry, Greece correspondent, Lloyds List
reeks have been stalwart defenders of maritime

traditions and that includes their loyal reading of
Lloyds List, which is likely to date back to early
editions that circulated in Lloyds Coffee House.
At the same time, their rise to prominence in
international shipping and the longevity of their stay in
the forefront of the industry has been a master-class in
adaptability against a backdrop of war, relocation, major
shifts in world trade and enormous technological change.
Under canvass, and under numerous different flags,
Greek-owned mercantile shipping began flourishing in the
19th century. With a few exceptions, notably the mainland
sailing vessel hub of Galaxadi, shipping communities
around Greece rose to the challenge of investing in the new
steamships. some islands were slower to do so than others,
but by the first decade of the 20th century there was a surge
in steamship investments.
contrarion investinG
The country recovered from losing about two-thirds of
its shipping capacity in the First World War. During the
shipping crisis of the 1930s, Greek owners took the
opportunity to expand when vessels were cheaper, starting
a countercyclical pattern that has been repeated many
times since. Their ability to emerge from a crisis with their
position in the industry enhanced was again evident in
the 1980s and is being proved once more as todays Greek
owners shrug off the severe challenges that have beset
shipping since the collapse of Lehmann Brothers brought
the shipping boom of the first decade of the 21st century to
an abrupt end.
During the second World War the Greek fleet suffered
even greater devastation than during the 1914-18 conflict.
This further setback was only partly mitigated when the Us
allocated 100 or so Libertys and other war-surplus vessels
for acquisition by Greek owners.
These became the nucleus of the post-war fleet and
there was fierce competition for them. some traditionally-
52
in the 20th century London

could claim to be the epicentre
of Greek shipping before the
second World War.
minded and cautious owners did not readily recognise

the opportunity as they remained suspicious of the new
practice of welding steel plates that was a hallmark of Us
wartime shipbuilding. They preferred traditional riveted
hulls although by the time the war was over these had been
made obsolete.
Many of the families who were the lucky recipients of
the original vessels allotted to Greece under the LendLease Act are still names in the industry today. Many other
additional Libertys were snapped up by Greek buyers on the
secondhand market in the years after the war. More than
80% of the Libertys still trading 20 years later were owned
by Greeks.
In the 19th century, the strength of the Greek-owned fleet
was located as much in offices in the Black sea, the Danube
and Turkey as it was in Greece or, increasingly, London. In
the 20th century London could claim to be the epicentre
of Greek shipping before the second World War. During
and immediately after the war the emphasis switched to
New York, which was the logical cradle of the Greek tanker
industry. But hostility in Washington, which culminated
in 1963 when new tax laws were imposed on foreign
shipowners, saw stavros Niarchos and many of the other
Us-based operators move a large part of their operations
back to London. Aristotle Onassis relocated to Monte
Carlo and Greece also benefited from an influx of activity,
especially after the introduction of a friendly new tax regime
for shipping in the 1960s. It was really only in the 1970s that
www.lloydslist.com
30/01/2014 14:11
people
Piraeus emerged as the unchallenged headquarters of the

industry.
Geographical mobility has been more than matched by
mobility of thought and deed.
Often enough the Greek shipping community has
resisted change, especially when foisted upon the industry
from outside. But it always ends up being among the most
adept at exploiting new industry realities.
change and adaptation

Greeks were among the loudest grumblers at the
introduction of double hulls for tankers after the Exxon
Valdez accident, but have become the worlds leading
tanker power in the double-hulled era. When mandatory
double hulls were mooted for bulkers, they reacted faster
and were instrumental in blocking the proposals.
They unsuccessfully fought the International Safety
Management Code, and virtually any other paper trend that
threatens to expand office bureaucracy and over-burden the
ships master and officers. But forecasts that they would
not survive ISM later looked ridiculous. Nowadays few take
their management systems, and certification for it, more
seriously than Greek companies.
Over the years, traditional seamanship and innate
operational acumen has allowed many Greek companies
to efficiently and safely run older vessels. At some
junctures, including the 1980s and 1990s, this congealed
into something like a mantra for success, accompanied by
curmudgeonly warnings against the siren song of ordering
new ships that could only contribute to overcapacity. But
Greeks have always built ships, too. To adapt to the new
safety orthodoxy that demands modern vessels they have
only had to revert to type.
Only two decades ago, an air of sniffy superiority
towards Greek shipping could still sometimes be detected
Onassis: one of the great Greeks

in northern European maritime capitals, and now and
again this would even creep into the pages of Lloyds List.
However, Greeks can now look back on nearly half a century
of being the worlds largest shipowning nationality, or
thereabouts. Condescension has more or less been erased
through such an extended period of superiority.
Recognition of the Greeks primacy in modern maritime
matters reached a peak of visibility in the first decade
of the 21st century. The stars aligned so that, at the
same moment, all four of the so-called Round Table of
international shipping associations Bimco, Intercargo, the
International Chamber of Shipping and Intertanko were
chaired by prominent Greek shipowners, while Efthimios
Mitropoulos served as secretary-general of the International
Maritime Organisation: the first Greek to ever head a UN
agency.
going public
Post-war success was built on Liberty ships
www.lloydslist.com
Less than a decade ago, the number of Greek shipping

companies that had struck up relations with the capital
markets, either in the US or elsewhere, was so few as to
be exceptions that proved the rule. The reputation of the
community as a last bastion of privacy and tight family
control was still intact.
While that might remain partly true, the shape of the
industry has stretched again to admit new sources of
finance. According to one very well-placed shipowner, by
the end of 2013 there are 60 Greek owners that are either
publicly listed or partnering international investment funds.
To judge from some of the envious remarks emanating from
other European shipping hubs, Greeks have gone from being
considered a relic of a vanishing business culture to being in
front of the curve in almost the blink of an eye.
Similarly, the backbone of the Greek-managed fleet
remains the humble dry bulk carrier but a significant
53
04/02/2014 16:34
PEOPLE
Dry bulk is still the backbone of Greek shipping
number of companies have taken the opportunity to invest

counter-cyclically in containerships, a furrow first ploughed
in lonely fashion by costamare in the 1980s. While there
has been no attempt to resurrect a major Greek liner
service since the demise of Hellenic Lines in 1984, recent
years have seen inroads made into other so-called more
sophisticated areas that were once considered the preserve
of Scandinavians, such as offshore shipping and shuttle
tankers.
A recent strategic alliance with norwegian state oil
company Statoil that was awarded to the Tsakos Group,
only after thorough operational and environmental vetting,
can be seen as iconic of the current standing of the leading
Greek owners in the mainstream tanker trades.
Gas shipping has been the most spectacular of recent
conquests. In the space of a few years, Greece-based
owners and operators have become the preferred partners
for international entities such as nakilat and BG Group,
while a Greek company is, to date, the only operator of LnG
carriers through the icy waters of the northern Sea Route.
Such things were not long ago widely considered beyond
the ken of the Greek owner, although anyone who was really
paying attention would not have ruled them out. To be fair,
though, there has been a leap forward in the last decade in
the self-confidence of the Greek shipping community. It has
been a long voyage to being considered blue-chip, and they
are getting used to that as well.
54
shutterstock.com
there has been a leap forward in the

last decade in the self-confidence of
the greek shipping community.
The Greek shipping industry has somehow kept the

necessary mass so that fidelity to maritime traditions and
experience have co-existed with the flexible mentality
necessary to keep up with the times. In some of the
industrys leading individuals these have been two sides of
the same character.
Being among Lloyds Lists longest and staunchest
loyalists, it is to be expected that some Greek readers
may be initially dismayed by the publications move to an
all-digital future. Greek owners over very many decades
have demonstrated their respect for information and
knowledge and it will be a surprise if, for once, they do
not adapt.
The onus will be on Lloyds List to continue to deliver
information they value. If that promise is kept, then the
industry should not be too fazed by the disappearance
of newsprint when it has withstood so many greater
challenges. n
www.lloydslist.com
29/01/2014 12:55
NRF1
Wherever you are, youre never that far from

an established world leader in shipping law.
Like Lloyds List, Norton Rose Fulbright started in the 1700s
and is one of the few global legal practices able to provide a
comprehensive service to shipping companies. We advise on
financing, corporate, M&A and securities, offshore and energy,
competition and regulatory, environmental issues, tax, dispute
resolution, admiralty, marine insurance, international trade
and commodities, infrastructure and employment. With more
than 50 offices across six continents, we can help you navigate
the way ahead in shipping law, wherever you are in the world.
Law around the world

nortonrosefulbright.com
Shipping Law Firm of the Year

Global Transport Finance
Awards 2013
Legal House of the Year
Global Transport Finance
Awards 2012
Rankings, awards and accolades included here
pre-date the combination of Norton Rose and
Fulbright and Jaworski LLP on June 3, 2013.
Financial institutions | Energy | Infrastructure, mining and commodities

Transport | Technology and innovation | Life sciences and healthcare
NRF17531_Transportad_CharleneNunn_A4_v1.indd
1
P23-55_PEOPLE.indd
55
18/12/2013 12:55
16:52
29/01/2014
SAF_01_LL_FP.pdf
2013/12/18
4:14 PM
CM
MY
CY
CMY
P56-96_Trade.indd 56
29/01/2014 13:59
TRADE
29/01/2014 13:59
trade
Young at heart
Still young at heart and still going strong, Lloyds List is a mere 280 years old
By Siim Kallas, vice-president for transport,

European Commission
ince its 18th century beginnings in London and

subsequent worldwide expansion, Lloyds List
continues to offer its readers a clear and informed
picture of the shipping economy. As a newspaper,
it has reported, accompanied and analysed the great
changes in world shipping since the industrial Revolution:
changing trade patterns, with imperial assertions yielding
to cooperation among commercial centres around the
world; containerisation, globalisation and even european
integration.
More recently, the focus has shifted to environmental
challenges and the information technology revolution in
transport management.
i have no doubt that with the ever growing importance
of global trade and transport, Lloyds List will be even
sharper and faster in its new digital version in analysing the
evolving challenges that are faced as well as presented by
world maritime transport.
Shipping is the backbone of the global economy. it plays
an irreplaceable role in linking countries and companies in
a closely interwoven web of economic ties. But to play this
role effectively, i can only repeat again that global shipping
and trade need open markets and equal conditions for
competition in transport services.
At the same time, global shipping cannot close its eyes
to bigger challenges for society, including environmental
and climate protection and the resulting need for cleaner
and safer shipping services.
Since no single person, company or country is in
a position to do this alone, it is the wider maritime
community which should be the first to set new
standards.
innovation & technologY

This is why, for its part, the european commission works
hard to consult and cooperate as much as possible with
its international partners and the wider shipping industry.
innovation and technology are a case in point. We are
taking steps to raise the use and deployment of alternative
58
shipping is the backbone of

the global economy. it plays
an irreplaceable role in linking
countries and companies in a closely
interwoven web of economicties.
fuels in europe, to improve the use of information and

communication technologies, cut red tape and make it
easier for shipping to play its vital part within regional and
global logistics supply chains.
european Union maritime transport policy aims to
promote efficiency, to guarantee and continuously increase
the safety and security of passengers and crews, and to
reduce the risk of environmental pollution.
it sets out to protect operators that follow good and fair
competitive practices, whom we should not allow to be put
at a commercial disadvantage compared with those who
take risky short-cuts on safety or the environment.
i believe that the broader community of world regulators
shares these objectives, as does the quality-conscious
shipping industry. As i repeat constantly, european policies
stem from the fact that shipping is a global business,
although we are sometimes accused of the opposite. On
that basis, europe also strives for globally-aligned shipping
rules and standards, which should ideally be set by the
international Maritime Organization.
safetY research
Regarding maritime research, the eU has targeted
fundamental safety issues such as ship stability, fire
protection and the dynamics of mass evacuation. The
results received so far are compelling: we consider them as
a constructive contribution for us all to improve maritime
safety under the auspices of the iMO.
www.lloydslist.com
04/02/2014 16:35
TRADE
European policies stem from the fact that shipping is a global business
innovation, in technology as well as in operations, will

allow industry to achieve the much-sought balance between
environmental and safety requirements and cost. it will
help to maintain and even raise its competitiveness and
safety record.
Particular importance will be given to standards for providing
and using LnG in shipping. For europe, i have proposed that
the eUs core maritime ports should be equipped with LnG
refuelling facilities by 2020. Since decisions are being taken on
this vital step forward over the next few weeks, i sincerely hope
that eU member states will manage to agree with us on the need
to create certainty for industry so that it can invest in cleaner
and cost-efficient technologies by that date.
if we are to get more goods and cargo moved by sea,
then we clearly have to cut bureaucracy for shipping. Our
Blue Belt initiative will allow ships to operate freely within
the eU internal market with a minimum of red tape.
As of June 2015, there will be no more paper forms in
europe: all port and other public formalities will be carried
out electronically. Here, i can only make the observation that
Lloyds List will beat us by one and a half years in doing this.
www.lloydslist.com
shutterstock.com
strategic interests
So what of the future for world shipping? i believe that
shipping and ports will remain at the heart of complex
logistics chains but to continue doing that, they will
also need efficient transport infrastructure that spans
and combines different forms of transport, along with
interoperable icT systems.
in turn, that calls for a stable structure of rules and
standards that allows investments to be made in safe and
effective infrastructure.
The european Union has a strategic interest in making
sure that maritime transport fulfils its role as a vital
component of the eUs transport system, securing its links
with the rest of the world. The key to achieving this is
innovation.
Today, Lloyds List is demonstrating some bold
innovation of its own. But it is also staying true to its
independent professional spirit.
i wish Lloyds List every success in its new digital era and
i wish its readership continuing good news from markets
and regulators. n
59
29/01/2014 13:59
trade
From East to West and back

efficiencies need to be implemented globally to boost profitability
By Liz McMahon, senior reporter, Lloyds List
P Worlds Mohammed Sharaf argues that while everyone

craves efficiency and effectiveness, the main driver
behind progress is cost. But if the industry worked
together, the opportunities would be unimaginable.
Mr Sharaf says that when Lloyds List started publishing
its attention was focused on the West. However, he adds
that if one glances back even further then the East was
dominant and this change in focus seems to be returning.
now the emerging market is going

through an explosion of growth and he
says that things are happening very
quickly.
In the past 20-25 years that I have been in the industry,
I have seen the pattern growing in that direction, Mr
Sharaf says.
In the 90s we saw China coming up and the southeast
Asian countries were called sleeping giants; now I think the
time has come from southeast Asia and the Middle East. You
only have to look at the numbers to see that, from a very low
base, it is increasing.
EmErging markEt dEmand changE

Mr Sharaf says that trade is a result of population growth
and where emerging economies are growing, people are
demanding change.
He adds that developed countries may have matured
but they also need some kind of redevelopment of their
infrastructure and requirements.
Growth will continue at a smaller pace but there is a
huge base, Mr Sharaf said.
Whether it is the developed or emerging market, Mr
Sharif says there are two areas of innovation: technology
and logistics.
60
He says that London Gateway has combined

technological changes with the thinking process behind the
supply chain.
This is something we believe the developed market
needs very much, Mr Sharaf says.
If you look at the UK market and see how the
distribution works today, each part of the industry operates
independently of each other the reason behind it is
historical.
Mr Sharaf explains that the UK went through a similar
process to what developing countries are going through
roughly around 800 years ago.
Now the emerging market is going through an explosion
of growth and he says that things are happening very
quickly.
thE bottom linE

People make quick decisions and sometimes, due to those
decisions, the supply chain does not work in tandem, he
points out.
The opportunity in that part of the world is to
bring them all together in one place so that the supply
chain is as efficient and effective as possible. This is
what everyone is after-efficiency and effectiveness in
everything we do and at the end of the day the bottom
line is cost.
Mr Sharaf says that the shipping industry it has not
progressed as rapidly as other industries in terms of
technology.
However, he adds that there are areas as far as supply
chains are concerned where there are technological
opportunities.
In the future we need to work out how to use the data
that we have. There is talk about big data what is going to
happen with it? Is it something that will happen today or
will it be five or 10 years time? Nobody knows, Mr Sharaf
says.
He said that DP World and its peers deal with a limited
number of customers and they all need to consider what the
industry can do to make the product more efficient.
At the end of the day everyone wants to be saving but
www.lloydslist.com
30/01/2014 14:12
trade
DP Worlds London Gateway development has combined technological changes with the thinking process behind the supply chain
Bloomberg
saving what? Time? Distance? The bottom line is money that
everyone wants to save, Mr Sharaf repeats.
If we have one area to hold data from point of loading to
being shelf, what could be the benefit from the saving of the
bottom line for everybody? It would be unimaginable.
Mr Sharaf says this is possible in the future but
it is difficult as the whole world has to come to an
understanding of how the data can be distributed and what
kind of data should be kept.
clockwork network
In terms of terminal performance, he adds that the
shipping world cannot have a full network working like
clockwork if one part of the world is efficient and the other
part is not.
However, he adds that it is likely that the developing
market will catch up much more quickly than it has taken
the US and European market to move towards automation.
It took them [the US and Europe] maybe 50 years to
come into automation and still not many of the terminals in
those countries are automated because of issues but there
are different ways of doing it, Mr Sharaf explains.
We can work with a partly automated system that may
be more efficient than a fully automated terminal while
www.lloydslist.com
things progress and we move towards a fully automated

terminal which is reliable and that is going to take a little
bit of time.
When asked for his advice for the next generation of
shipping, Mr Sharif warns that while it is an enormous
industry, it is not being recognised.
It is an integral part of global trade and the backbone of
any economy. Without an efficient port, you will not have an
efficient economy, he argues.
Look at emerging markets, Mr Sharif says one of
their main problems is the lack of efficient ports and
infrastructure.
To new entrants to market, he says the main piece of
advice he has is to not overdo it.
Some people come into the industry and they think they
can turn it around overnight and become billionaires. This is
a long term effort, Mr Sharaf says.
We welcome competition, it is not that I am trying to
turn it away but it is not something you can buy and sell
overnight. It cannot be a commodity as it is an integral part
of the economy. We are operators but we consider ourselves
to be profit makers, not profit takers. We make profit on a
sustainable basis. You cant make shortcuts in a long-term
business. n
61
30/01/2014 14:12
Future Onboard
We carry the equipment that builds tomorrow
Deepsea transportation since 1927

www.hoeghautoliners.com
Head Office: Hegh Autoliners AS, P.O Box 4 Skyen, NO-0212 Oslo, Norway, Telephone: +47 21 03 90 00
For local offices, please refer to our website.
29/01/2014 13:59
TRADE
changing times
Port automation has come a long way since the introduction of the container
By Roger Hailey, editor, Containerisation International
Hen the first 20ft containers arrived in Hong

Kong aboard general cargo vessels in the early
1970s, John Meredith was not convinced that the
new idea would last.
They each had to be man-handled in, because the ships
were not designed for these damn things and the shore
based equipment was not very convenient either.
The boxes had to be lashed on deck, and then there was
the problem of moving them around the tween decks. The
containers had wires on all four corners, leading up to one
central wire which went up to the jib crane.
Dr Meredith cBe, group managing director of Hong
Kong-based global ports group Hutchison Port Holdings,
recalls that there would sometimes be two dockers atop the
swinging container as it made its way from the quayside to
the ships hold.
They were needed to push off from the hatch coaming, as
the box went down into the tween decks, and they generally
made sure the box got the right position as it went down
below deck. it was an incredibly dangerous and time wasting
operation, in order to get these things in place.
The guys would then hop on to the spreader and the spreader
would then come ashore. it was quite a hairy operation.
moving boXes
each and every box would take around 15 minutes to put in
place on board ship, much longer than it would take to swing
cargo on board with a well operated ships derrick system.
By comparison, HPHs new semi-automated terminal at
Barcelona today can move up to 52 boxes per hour, per crane.
The average around the world is 30 moves per hour per
crane, and rising.
Says Dr Meredith of the early box experiment: initially,
there was a lot of discussion about whether these things
would really ever work, and ultimately they built cellular
guide ships to solve that particular problem.
But, at first, it was very hard to justify how these things
would be stowed on deck and lashed down securely, jammed
between ships derricks and the side rails.
www.lloydslist.com
each and every box would take around

15 minutes to put in place on board
ship, much longer than it would take
to swing cargo on board with a well
operated ships derrick system.
Apart from the physical labour involved in moving boxes

around the hold of a non-cellular vessel, there was also the
problem of wasted space due to their rectangular shape
versus the natural curvature of a ship. With general cargo,
cartons could be packed into every nook and cranny.
Adds Dr Meredith: We then handled containers for the
Tung Group because Tung was converting some of his general
cargo ships with cell guides, to overcome this problem of
stowing them below deck.
But the problem on the quayside still remained. The
equipment tended to be jib-operated cranes and it took a
long time before purpose built cranes came in.
An early trend was established, says Mr Meredith: The
ships, as even up to today, tended to be the leaders and the
ports tended to follow.
One of the biggest problems for ports around the world,
even today, is that they were originally built and set up for
general cargo, with warehouses and customs sheds all
over the place, totally messed up in terms of being a nice
rectangular shape for containers.
He believes that it has taken a long time to knock down
sheds, straighten out quay lines to develop port areas more
suitable for handling containers.
The ports all had to be converted from handling general
cargo, where there was no specific need for the efficiency of a
yard layout to serve the requirements of a modern containership.
They all suffered from that. Slowly, around the globe,
ports had to knock down offices, knock down sheds, line
up pavements and stacking areas in order to meet the high
productivity levels required by a container ship.
63
29/01/2014 13:59
trade
Meredith: There will be fewer calls, but larger vessels, but I think the market will adjust, with more cargo moving because the box
rate is attractive enough to encourage even more global trade
Dr Meredith believes that it is only recently - and normally

associated with big land reclamations - that custom-built
ports have the most efficient layouts for container handling
productivity.
Dr Meredith cites Barcelona as an example of where there
is an old port area designed originally to handle general
cargo, with some subsequent conversion work to handle
containers.
It was only when we moved into the new port zone of
Barcelona, with automated operations, that we swung from
reasonable productivity to nearly double what we were doing
before.
This was achieved by building from scratch, in a
reclaimed area, a proper port facility designed for containers,
everything being rectangular-friendly, with no buildings in
the middle of the yard, a completely clean swept aircraft
carrier type deck.
Dr Meredith believes that the container ports of the future
will need large areas with clean access to containers, and
boasting long, stretching berths with a minimum of right
angle bends.
Those container ports with long, linear, mile after mile
berth length are going to be the winners. Those that have
64
rectangles and come back on themselves - we even see this

on the new Maasvlakte 2 development in Rotterdam - are not
going to be the ports of the future.
LONGER MONSTERS
Dr Meredith acknowledges that mile after mile of linear quay
line will not be a practical option for most new ports.
However, those ports with the longest and straightest
possible quay line will be able to serve the greatest number
of ultra large container ships and feeders at the same time.
These monsters are getting longer and longer, and every
time you think you have got the length right you dont and
you have to add another phase but in the same straight line.
HPH Trust has made acquisitions of adjoining berths
in Hong Kong from other port groups in order to achieve a
longer linear length for its terminals.
Weve acquired that particular two-berth operation
because it gives us four long berths in a line, which is what
we needed.
Asked about mistakes made by the ports industry with
the advent of containerisation, Mr Meredith remarks that
port operators were caught out by the initial tariff structure
associated with the standard 20ft box.
www.lloydslist.com
29/01/2014 16:19
TRADE
Meredith: Those container ports with long, linear, mile after mile berth length are going to be the winners
First of all we had a 20ft box that was 8ft tall, and with a
tariff rate set against it. All of a sudden, the lines introduced
an 8ft 6ins high box which paid the same tariff as before. The
ports argued that the lines were getting more cargo through,
but the lines replied that it was costing the ports no more to
handle it.
And then came the 9ft box. The container kept going
up in height, but also longer, to 40ft. The carriers again
argued that port operators had the same single movement
and so why should they charge more for a 40ft box as a
20ft?
As a result, port operators income shrank because fewer
container moves were going cargo through the port. The
boxes were bigger but the shipping lines were not prepared
to pay a differential for the varying size of box.
So was born a bone of contention between port
operators and shipping companies that still prevails today, in
some aspects.
Dr Meredith says that the growth in global trade, and the
increase in empty boxes, allowed the port operators some
clawback, as they were still being paid to handle a nonrevenue earning container.
www.lloydslist.com
Looking back at an industry that now accounts for 160m

teu of revenue earning container moves per year, Dr Meredith
believes that containerisation, from its shaky start, will
continue to grow, despite some fundamental changes.
The shortening of ship commissioning, from 4-5 years to
less than a year, has seen a commoditisation of the container
market, which has changed the economics of the shipping
line supply side.
Huge fortunes were made in the old days by the
shipowners, but that is extremely difficult today, given a
commoditised market where they are all vying for the same
cargo.
Ports will continue to meet the challenges of larger
vessels, probably beyond the current 18,000 teu benchmark.
i am very cautious now, because i am one of the guys
who said containerisation was never going to work. With the
value of hindsight and with my lesson learnt from before i
know that the world moves on.
Maybe the whole market will change. There will be
fewer calls, but larger vessels, but i think the market will
adjust, with more cargo moving because the box rate is
attractive enough to encourage even more global trade. n
65
29/01/2014 13:59
BSM for print.pdf 1 10/01/2014 16:20:24
CM
MY
CY
CMY
www.bs-shipmanagement.com
29/01/2014 13:59
trade
Shipmanagement and the quest for quality

the business of third-party operation of commercial ships is as demanding as any in the maritime world,
calling for highest level of discipline, imagination and continuous improvement
By Tom Leander, editor-in-chief, Lloyds List Asia
he future of any important undertaking depends

on its past. The company today known as Bernhard
Schulte Shipmanagement (BSM) was a result of the
merger of four sister companies, namely hanseatic
Shipping (established in 1972), Dorchester Atlantic Marine
(1978), eurasia Group (1981), and Vorsetzen Bereederungsund Schiffahrtskontor (1999), all under the umbrella of
the Schulte Group, in 2008. The organisation had its
origins in an era when shipmanagement itself still a
young profession was at point of change. To fully grasp
what BSM is today with its global presence, a clientele of
premier shipowners and a portfolio of integrated maritime
solutions, it is necessary to examine how the profession
itself has changed over time and how the company has
helped shape those changes.
Today third-party shipmanagement accounts for about
15% of all shipmanagement, having grown from 10% from
10 years ago. The increase in scale implies an incremental
advance in shipowners taking the third-party option.
Although impressive, third-party shipmanagements
claim on its available market has been slow to develop.
With some 85% of owners opting to deploy technical
management and other services on their own ships, rather
than turning to an outsourced provider the opportunity for
growth is immense. In fact, accelerated growth compared to
past levels may be realised, but that is a matter of grasping
the demands on shipmanagers and the strategy, discipline
and execution necessary to perfect the model, which itself
is undergoing change.
Shipmanagements history has been relatively brief,
having developed only in the past 50 years. Its progress is
well recorded and senior members of the industry have
direct knowledge of its past.
The modern phase of shipmanagement can be said to
have begun following after a series of high profile accidents
during the shipping crisis of the 1980s, culminating in the
Exxon Valdez casualty and oil spill in 1989.
All along, shipping in general is facing an image
problem. While seaborne trade accounts for about 90%
www.lloydslist.com
BSM has roots going back to the days of sail
of all world trade, the shipping industrys structure, its

regulatory framework which includes the International
Maritime Organization, classification societies, as well
as regional statutes imposed by nation states can seem
confusing and out of reach to the general public.
Ports are no longer nestled in coastal city centres, but
often isolated at some distance. Seaborne trade is largely
invisible to the citizens that benefit from its existence.
Moreover, the patchwork of largely voluntary regulation
leaves shipping vulnerable to accusation of non-compliance
and irresponsibility to society. Furthermore, the other
factors such as the changing global economic landscape,
67
30/01/2014 14:12
TRADE
the rise in societal demands, and the lack of awareness of

the contribution of maritime industry to global economy and
to our daily lives have their effect on reducing the available
candidates in the workforce choosing shipping as a career:
it is increasingly harder to attract the best and the brightest
talents to a life at sea.
Rajaish Bajpaee, at the time the president and chief
executive of Hong Kong-based eurasia Group, shared his
industry experience. He was among the first in this era
to call for tighter voluntary compliance and a culture that
strived for a uniform standard of safety and quality in
shipmanagement.
in fact, eurasias own evolution was firmly in step with
industrys push for higher standards. eurasia had been
founded in 1981, in Hong Kong, by three partner companies
with the goal of introducing a comprehensive technical ship
management service in Asia. each of the three companies
contributed five ships to the new venture, which was
committed to managing its own fleet at the outset. One of
the partners was Bernhard Schulte, and in 1988, it bought
out the two other partners and established eurasia as a
wholly-owned subsidiary with a mandate to grow as thirdparty shipmanager with as little as just two ships left in the
management at that point of time.
eXpanding range
With determination and in the relatively short time of ten
years, eurasia introduced into the market a combination of
complementary services not only new to Asia, but new to
shipmanagement. These included technical, crew and ship
management; crew recruitment and training; newbuilding
supervision, quality assurance and risk management
consultancies; and port agency, procurement and logistics;
marine travel; marine insurance advisory; and maritime
catering under the emblem Seachef.
With eurasia able to provide seafarers qualified for any
size or type of tanker, dry bulk carrier or containership, Mr
Bajpaee saw the opportunity for expanding the companys
range beyond Asia to all the major shipping centres. The
company embarked on a five year expansion plan delayed
somewhat by the 1997 Asian financial crisis. The company
eventually set up a number of regional offices, with the
ability to offer a global, year-round service befitting the
maritime industry needs. eurasia had also invested in
database and information systems commensurate with its
global scale. By the early years of this century it offered a
suite of services that, uniquely, allowed the shipowner the
flexibility to select those services as suited to its need.
This ability to offer both niche and comprehensive
services allowed eurasia to attract shipowners of any
class or size. Mr Bajpaee , quoted in a study by Hong Kong
Universitys centre for Asian Business cases published
in 2004, shipowners did not care whether a shipmanager
68
BSM chief executive Rajaish Bajpaee was among the first of to

call for tighter voluntary compliance and a culture of uniform
standards of safety and quality
operated 50 or 500 ships; they only want assurance that

the ship they owned was under professional management
and offered the services required for safe and successful
operation. eurasia was one of two overall winners of the
prestigious Hong Kong Management Association Quality
Awards in 2003.
The evolution of eurasia to a global, multi-service
company tracked the expansion and improvement of
standards in the shipmanagement industry. From the
1980s, Mr Bajpaee became aware that the ability to realise
successful third party management on a global scale
required closing the credibility gap that the third party
industry suffered in the eyes of shipowners and charterers.
Moreover, following the crises of the 1980s, shipowners
and managers were faced with an enfilade of regulations
and security measures imposed by regional bodies, national
governments, and trade organisations. The burden on third
party shipmanagers to deliver quality increased, despite an
emphasis by shipowners on reducing costs lowering fees
that emerged from the shipping recession in the 1980s.
Shipmanagers were increasingly seen as responsible for
declining standards while simultaneously under pressure to
eliminate costs.
Shipmanagers recognised the need to fend off
unilaterally mandated regulation and improve the
perception of the industry. in response, an informal
association of leading shipmanagers founded the
international Ship Managers Association, or iSMA, in 1991.
eurasia and Hanseatic Shipping, along with some other
like-minded shipmanagers are the founder members of
iSMA. The group issued a code in 1998 and required an
independent audit by classification societies as a condition
of entry into iSMA.
www.lloydslist.com
29/01/2014 13:59
TRADE
Mr Bajpaee, a key founder of iSMA, believed that his own

company and the industry needed standard that not
only allowed for an established code, but for progressive
improvements. He introduced Total Quality Management
a system that was embraced by Japanese manufacturers
in the 1980s leading to growth and movement up the
value chain to eurasia in 1995. Mr Bajpaee joined the
global quality council of the conference Board in 1994 and
eventually became its Asia-Pacific co-chairman. He was
able to study the implementation of TQM at companies
like 3M and Xerox before adapting its principles for
shipmanagement.
As the process developed, Mr Bajpaee came to
believe that so-called soft skills are component of a
company culture of tremendous but perhaps somewhat
unrecognised importance to the success and safety
of a shipmanagement enterprise. in other words, the
raising of standards in the industry must be more than a
matter of compliance to codes, but voluntary action and
understanding.
if a seafarer sees a compatriot

entering a tank without a mask he
should know that it is his responsibility
to stop the man and ensure safe
practice.
regulatorY constraints
We are now trapped mentally in a compliance mode; we
are not leading, says Mr Bajpaee, referring to several
forces that have acted on the industry. These include the
proliferation of regulatory constraints from various bodies
often with overlapping concerns and the adoption of iSM
code which effectively superceded the iSMA code. SOLAS
adopted the iSM code in 1994 and by 2002 almost all of the
international shipping industry was required to comply.
Both the iSMA and iSM codes were very process driven,
Mr Bajpaee says. They werent drivers of culture.
The cultural factor affects all ranks and all corners
of a ship. if a seafarer sees a compatriot entering a tank
without a mask he should know that it is his responsibility
to stop the man and ensure safe practice. There is nothing
in a prescriptive code that supports and encourages more
vigilant behaviour or behaviorial change.
www.lloydslist.com
BSM has two training centres for seafarers, one in Cyprus

and the second in India. The Cyprus centre, which is run as a
joint venture with the Cypriot government, is internationally
recognised and has produced between 3,000 and 4,000 cadets
He adds that the increasing solitary nature of seafaring

demands a concerted effort in building a culture of quality
and safety aboard ship. When i was at sea, says Mr
Bajpaee, who began his career as a ships engineer, there
were more people on board and we had much more time
in port. You functioned as part of a team. Today, a seafarer
may finish his watch and simply retire to his cabin and
listen to music. its a different world.
The evolution of BSM had continued apace in the
new century. By 2007, the ships managed by the 4
shipmanagement companies under the Schulte Group
companies counted around 600. considering the then
market scenario, the increased demand for qualified crew,
and the need for cost-effectiveness, the four units merged
in 2008 to form the organisation as it exists today, which
provides services for nearly 700 vessels, with Mr Bajpaee
being the chief operating officer and later the chief
executive of the unified company.
The scale of BSM makes it one of the largest
shipmanagers operating and a pioneer in maritime
solutions. However, Mr Bajpaee continued to focus not on
size, but on quality and flexibility of service. BSM firmly
believes that, in shipmanagement, quality can only be
attained by investment in people.
BSM has its own multifaceted network consisting of
various international Maritime Training centres. These
are located in Poland, cyprus, Mumbai, Manila, and
Shanghai. The companys training system is based on
continuous improvement comprises a progressive mix of
internal and external seminars, workshops for officers
and ratings, safety and security drills and onboard
training. BSM provides training on maritime simulators as
69
29/01/2014 13:59
TRADE
The 171,095 dwt bulk carrier Pacific Fortune is among the vessels operated by BSM
well as chemical and gas operation and safety courses.
employees are encouraged to undertake further training
and education, serving the dual purpose of providing
advancement for talented workers and providing the
company with available pool of workers with technical skills
to meet the most demanding requirement.
employees are encouraged to

undertake further training and
education, serving the dual purpose
of providing advancement for talented
workers and providing the company
with available pool of workers with
technical skills to meet the most
demanding requirement.
A workforce of the best people is needed for the
challenges ahead. Shipmanagement, in Mr Bajpaees view,
requires continuous improvement for survival.
We have more than 100 clients all of them are
established for much larger resources at their disposal, he
observes. All have in-house shipping, every shipowner is a
shipmanagement company by definition. We have to prove
to them that we can do it better.
70
continuous improvement
He continues: We have to constantly innovate, improve
our process and the organisational effectiveness of our
culture. We need to be a standard for benchmarking and
remember that our improvements will be soon copied. We
need to constantly move the goal post towards further
improvement.
Mr Bajpaee has grafted his credo of continuous
improvement on to industry practice as well. His has been
a key player in industry affairs, notably as president of
intermanager during 2003 and 2006 for two consecutive
terms, when he conceptualised and initiated a major drive
to provide the shipmanagement industry with shipping
key performance indicators. Still under development,
the project has already made headway in creating a
workable pan-industry standard. He continues to provide
stewardship of the KPi project as chairman of the Board of
Shipping KPis Association.
creating a benchmarking resource for the common
benefit is one way that Mr Bajpaee reckons the
shipmanagement industrys credibility will continue to grow
and give it a fighting chance of closing the gap between
third-party and inhouse management.
The exercise in transparency and continuous
improvement will continue upheld by responsible parties
in the shipmanagement industry, and within BSM itself.
if you have one candle, you can protect the brightness
of yours alone and the room will be dark. But with that
one candle, you can light 1000 others and the light will
endure. in the end, leadership is about creating more
leaders. n
www.lloydslist.com
29/01/2014 13:59
TRADE
for china shipping, a generational shift

The worlds biggest shipping nation is a amid a reform drive to achieve sustainable growth and root out
corruption. Expect a shift in shipping policy will and accelerated industry reform
By Tom Leander, editor in chief, Lloyds List Asia
HinA is about to change. At a crucial meeting in

november known as the Third Plenum, President
Xi Jinping outlined the communist Partys goal to
reform parts of the financial system and state-owned
enterprises.
The stated goals align with the governments long
discussion about rebalancing the economy away from
investment-led growth that characterised the past 20 years.
Although the economy is expected to grow faster than
the economies in europe or the US for many years, china is
expected to continue posting lower on-year growth.
chinas trade partners are changing, too.
As trade tapers off with europe and eventually with the US,
the ASeAn region is an increasingly important trade zone.
The intra-Asia trades will become more self-sustaining than
in the past.
Many of these trades have been focused towards china,
which has completed goods then shipped them on. However,
the intra-Asia trades are now growing to include goods and
components consumed in these other countries.
important trade pacts, expected to grow in membership,
support growth in intra-ASeAn plus china trade. Trade
volumes are expected to surpass chinas seaborne trade with
europe the largest in the world within years.
Thats why the potential for Beijing to loosen state control
holds such promise for shipping.
if the economy opens in the manner the government has
pledged, it will present unprecedented opportunities to the
global shipping industry to obtain finance, build business
partnerships and, perhaps, to find new markets.
chinas policy announcements often have a try-it-on
quality: officials enunciate the rough parameters of a policy,
but the progress of reform can be touch and go.
One method is to institute a kind of experimental reform
in a particular region, the way Deng Xiaoping launched the
beginning of chinas move to capitalism in southern china,
offering a successful lead to the rest of society.
www.lloydslist.com
the intra-asia trades will

become more self-sustaining
than in the past.
Many predict the declaration of a free-trade area for

Shanghai heralds the same kind of approach.
The free-trade experiment could allow banking reform
within the confines of the Shanghai FTZ and a relaxing
of trade restrictions, both of which would be important
developments for shipping.
But we shall see.
chinas leaders of the past 10 years were generally seen to
be slow and indifferent implementers of reform policies.
in contrast, the new government wants to make its mark
by addressing reform, although no-one knows how sincere
its efforts will be.
Moreover, a china with slowing growth means more
sustainable growth must be encouraged and only reform
can achieve this goal.
Among the elements discussed in chinas economic
reforms is the reform of state-owned companies.
These companies pay dividends to the government
and provide a powerful support for the economy through
an organisation known as the State-owned Asset and
Supervision Administration.
State-owned enterprises have become much more
efficient over time.
However, since the last round of reforms affecting these
businesses, some have become bloated again as state-owned
banks have naturally favoured them. Many are inefficient.
changing oWnership
One idea is to open those in need of restructuring to some
private ownership through share sales.
71
29/01/2014 13:59
TRADE
China shipbuilding is under extreme pressure
State-owned enterprises are also being scrutinised for

corruption, as part of the anti-corruption drive that has
gripped the country following the Bo Xilai scandal, in which
the former minister of commerce and mayor of Dalian was
convicted on corruption charges.
One of the targets of this drive is cosco, the nations
largest shipping company.
Several executives from cosco have been under scrutiny
and one senior official recently stepped down during a
corruption probe.
All this is by way of saying the change in national policy
will have an impact on the state-shipping sector but that the
impact will be positive.
More competition, less waste, less cronyism.
nevertheless, the transition, if committed, will be painful.
china shipbuilding is under extreme pressure. The country has
1,600 shipyards, but in the first nine months of 2013, the top 39
yards claimed 93% of the 38.1m dwt in newbuilding orders.
Small chinese yards face extinction. The 12th five-year
plan to 2015 recommended that 60% of shipbuilding capacity
is restructured into the top 10 yards. Although nothing
official has happened, this process could happen by natural
selection.
72
Bloomberg
Several elements suggest the prognosis for chinas

shipbuilding sector as a whole is positive.
For one thing, restructuring the countrys shipbuilding
capacity has long been on chinas agenda. For another, the
top state-owned yards are increasingly competent, both as
managed businesses and as producers of higher-value ships.
in other words, the government now has something to
work with.
if greater emphasis is put on market principles in the
banking sector, a more efficient allocation of capital funds
will naturally gravitate toward the best producers, even in the
state-owned context.
The long-desired shakeout of the weaker yards will
naturally follow.
Very little has happened in shipping policy in the past year.
This is a reflection of the change in government. Beijing
has made frequent promises in the past about state aid
to shipping and the government has weighed in via the
transport ministry in banning Vale, the Brazilian iron ore
miner whose 400,000 dwt ships are now excluded from
chinas ports.
Shipping has never been at the top of chinas reform or
aid agenda, unlike the steel or mining industries.
www.lloydslist.com
29/01/2014 13:59
TRADE
Cosco has been so cash-strapped it may be missing the benefit of investing now
.
drY bulk dramas
it should be said that under new management since 2011,

cosco has weeded out or written down as a loss many of these
onerous contracts and its business is improving.
Unfortunately, the dry bulk market despite a rally in
capesize and other markets now and then is still marked
by low rates and overcapacity. Some of that overcapacity
can be chalked up to cosco itself. Moreover, dry bulk owners
have been buying eco-ships like mad, anticipating a dry bulk
market turnaround in 2014 and beyond.
cosco has been so cash-strapped it may be missing the
benefit of investing now. That said, it can usually rely on
state-related contracts in a lot of its business.
The main listed unit of cosco china cosco Holdings
has been forced to sell assets, sometimes to the parent
company, to prevent deeper losses.
Many think a series of sales this year will prevent it
declaring a third year of consecutive losses that would
necessarily have it delisted in Shanghai, where the rules on
consecutive losses are stringent.
if this is a wait-and-see affair, it is one that holds tremendous

promise.
The cosco story has remained much the same since the
company declared its first losses in 2011. it has lost more
money than any shipping company ever, due to its chartering
in of vessels at the top of the market at what it now calls
onerous prices.
Most of coscos trouble has been concentrated in its
massive dry bulk unit.
After cosco crosses this rubicon, perhaps after some

continued slow-moving but convincing internal housecleaning, china cosco Holdings could come to market again
with an equity issuance. Why would shareholders invest?
That is easily answered people would believe that a betterrun cosco would also have the full faith and credit of china
inc behind it, making it a good long-term bet.
For one thing, chinas state-owned shipping industry is

a hedge against the cost of transport for the countrys other
state-owned businesses.
When chinas state-owned carriers are profitable, that is
all to the good. They pay the state dividends.
However, when the carriers are running at a loss, when
rates are at all-time lows, it is their customers the other
state-owned companies that benefit.
Loss or no loss, operating the ships benefits the
economy. This could be the underlying reason why true
reform of a deeply troubled financial company such as
cosco is taking so long to unfold.
There has not been much movement on policy that bails
out troubled shipping companies.
However, there have been local developments, such as the
Shanghai FTZ, that could lead to greater competition and create
opportunity for well-run state-owned shipping companies.
www.lloydslist.com
return to market?
73
29/01/2014 13:59
TRADE
Chinese manufacturing will remain an important influencer of maritime fortunes along with the governments long terms plans to
rebalancing the economy away from investment-led growth that characterised the past 20 years
shutterstock.com
The Ministry of Transport, Ministry of Finance and the
national Development and Reform commission the
top economic planning body has proposed a shippingstimulus package, shelved for more than a year as the new
government establishes its hold.
However, things cannot stay as they are. The excess
capacity is simply unsustainable and the top yards are
increasingly capable shipbuilders and managers.
Moreover, the governments push toward market forces makes
consolidation a natural outgrowth. chinas top shipyards are now
more ready to absorb this consolidation than ever before.
There will be a lot of pain as jobs are cut, but increased
competition will accelerate chinas move up the value chain
in shipbuilding.
As with most changes in china, the one applied to shipping
will probably be a little slower play out but also bigger in its effect
and implications for the world than outsiders are willing to grasp.
The current reform drive in china is tied up with a generational
shift in government. currently, the fourth generation since the
communist Revolution still has a grip on power.
The current house cleaning under Xi Jinping anticorruption drive is partly aimed at consolidating the fifth
generations hold on government a process that will play
out over the next four years until the 19th Party congress,
when the full set of fifth generation leaders will emerge. The
anticorruption campaign has already touched cosco.
in October 2013, Xu Minjie, who oversees safety issues
for cosco Group, was detained by chinas central Discipline
74
inspection commission, the nations anti-graft watchdog.

Local press speculated that the detention was linked to cargo
agents and vessel-leasing deals. in chinese parlance, lower
level officials that deal in corrupt activity, as Xu allegedly has,
are termed flies. Flies are generally allied with Tigers, major
political figures that have wealth ties to chinas state-owned
enterprises.
The current series of probes, according anti-corruption
expert John Hoffman, co-founder of Hong Kong consultancy XRG,
can be understood as Tiger hunts to loosen the grip of the
fourth generations hold on political wealth through the stateowned system. That hold has led to a brazen flaunting of wealth
that has engaged the chinese populace. The investigations are
likely to continue at least until the 19th Party congress in 2017,
when the new generations Tigers will be established.
The anti-corruption campaigns purpose, according to Mr
Hoffmann, is to redefine the parameters of wealth connected
to power. Very likely, the campaign offers a chance for longneeded policy changes in state shipping to unfold and adhere,
as any push for a more market-based shipping industry, and
for more transparency in shipping companies, would collapse
if the status quo is allowed continued unchecked.
The outcome of the campaign, allied with guidance of state
policy, could well present a more competitive chinese shipping
and shipbuilding industry to the world, effectively completing
the broad shift of capital and influence in shipping to Asia,
perhaps the most profound shift in the worlds oldest global
industry has yet witnessed. n
www.lloydslist.com
29/01/2014 13:59
TRADE
containers and global trade

Maersk Line has emerged as the largest player in the global container trade
LOYDS List is nearly 300 years old while

containerisation, launched by Malcom McLean and
the Ideal X in the USA in 1956, is not yet 60 years of
age. At that time, the worlds population was 2.8bn
and the worlds import and export trade was worth $171bn
at current prices.
By 1985 global population had nearly doubled. china
represented about 1.8% of world trade, following its
opening up by Deng Xiaoping in 1978, and global trade hit
$3.8trn.
The years to 2008 showed substantial growth. World
trade reached $32.6trn that year before collapsing to just
over $25trn in 2009. chinas share hit 9.8% in 2010 and,
despite world population now exceeding 7bn, hundreds of
millions of people particularly in the developing countries
had moved out of poverty.
could this rapid economic development have

occurred Without the container?
That is the thesis of the forthcoming book creating Global
Opportunities Maersk Line in containerisation 19732013. While largely unrecognised, the role of low-cost,
reliable container shipping has been and remains one of
the key facilitators of globalisation.
Maersk Line was late into containers Mrsk McKinney Mllers decision in 1973 to invest in Maersk Lines
first full container service, between the USA and Asia,
celebrates its 40th anniversary this year. Yet, shortly
before this, there were already 167 container ships in
operation and all the main trades had been containerised.
Maersk Lines philosophy was to grow organically, but
opportunistically it made its first acquisition in 1987, buying
the rights of companie Maritime Belge and chargeurs Runis
in the europe/Asia trades to become a factor in that trade. The
following year Maersk Line entered the transatlantic trade, and
was beginning to consider itself global.
in Maersk terms, the early 1990s saw the development
of two new business opportunities, Maersk Logistics, now
called Damco, and the beginning of significant planning
that in 2001 led to the creation of APM Terminals. Today
these are two substantial businesses in their own right.
www.lloydslist.com
Maersk benefits from owning both ships and ports
Maersk Lines acquisition of eAc-Ben Line in 1193 took

Maersk Line to the top of the container operator league.
in 1999 Maersk Line did two acquisitions: Safmarine and
then Sea-Land. But these were only two of the 43 mergers
and acquisitions noted by containerisation internationals
2000 Yearbook as occurring between 1995 and 2000.
And in 2006 Maersk Line finalised its latest acquisition,
P&O nedLloyd, establishing a significant capacity lead over
the second and third largest carriers in an industry that the
2011 UnTAD Report indicated now amounted to some 151m teu.
75
29/01/2014 14:00
TRADE
Maersk carries more containers than any other line
so, Where is the industrY todaY?

Global economic growth remains slow and seems forecast
to remain so. The nature of growth may also be changing.
in container volume terms, the GDP multiplier that has
swallowed substantial container shipping capacity year on
year, has declined and has possibly disappeared.
Structural changes such as chinas growing focus on its
domestic market, reshoring as well as the growth of the
intra-Asian trade, means that the high container volume
growth of earlier years is probably over.
Profitability in the industry remains poor, delivering
among the lowest returns in the overall supply chain
and well below the industrys cost of capital. That is not
surprising when one can move a flat screen TV that retails
at $700 from Asia to europe for about $4.00 or a pair of
sports shoes for $0.22.
A consequence has been the focus on reducing costs
to the minimum. The desire to reduce slot costs has led
to larger container ships, culminating to-date in Maersk
Lines Triple e ships of 18,200 teu, over 10 times the size
of Maersk Lines original A-class ships of 40 years ago.
With the massive investments needed to continue
providing the ultimate customer with the products and
range of choice they have come to expect through regular,
reliable, low-cost services, consortia and vessel sharing
agreements of one or another form have existed since the
early days of containerisation. The planned P3 agreement
aspires to take this to the next level.
76
one can move a flat screen tv that

retails at $700 from asia to europe for
about $4.00 or a pair of sports shoes
for $0.22.
Sea transport of containers is only one part of the

process. investments in infrastructure, whether in
terminals, roads, power supplies or management of the
supply chain as well as innovation of the container itself,
are other critical elements in bringing the benefits of
containerisation to the market.
coupled with skilled, well educated and trained
employees locally in offices and agencies around the world
serving the customer, those that doubt the continued
opportunity to differentiate liner services may find some
inspiration by looking into the various carrier philosophies
at work within the worlds airline alliances.
The book creating Global Opportunities Maersk
Line in containerisation 1973-2013 will be published by
cambridge University Press in the spring of 2014. n
www.lloydslist.com
29/01/2014 14:00
trade
TEU - the one true global standard

the humble 20ft box has become the benchmark of trade volumes
By Janet Porter, editor in chief, containers, Lloyds List
LOBALISATION has been the buzzword of the past two

decades and yet even today there are very few truly
international standards in this increasingly interconnected world.
The one exception is the teu or twenty foot equivalent
unit the measure for a standard shipping container that has
contributed so much to the spread of prosperity to even the
most far-flung corners of the planet by simplifying the process
of ocean transport and cross-border trade.
Yet ironically, this instantly recognisable term, at least in the
world, of shipping, is an imperial measure.
A vessels length, breadth and other dimensions may be
quoted in metres, but every containership in the world is judged
by the size of its teu capacity, regardless of where it was built,
its flag, ownership or trade route.
The phrase itself was coined by Richard Gibney, a
shipping journalist and former editor of Containerisation
International who was struggling to find some way of
comparing ship capacities when containerisation was still
in its infancy and, at that stage, boxes were not all of a
standard size.
The choice of feet rather than metres for this new
measurement reflected the fact that containerisation is firmly
rooted in the US.
EUropEs powErhoUsEs
These days, there are no major US container lines, only a
handful of boxship carriers that operate in the protected Jones
Act trades. But once, they were industry leaders.
Today, the worlds top three carriers are all European,
with Maersk having swallowed up the once mighty Sea-Land
Services, and CMA CGM now owning the US Lines brand name.
APL, or American President Lines, may still have a strong
presence in the container trades, but it has been Singaporeowned since 1997. Lykes Lines was acquired by CP Ships which
was then taken over by Germanys Hapag-Lloyd in 2005.
These, though, were among the pioneers of container
shipping, along of course with American trucker Malcom
McLean who is widely credited with first coming up with the
idea of loading cargo into a standard metal box for ease of
www.lloydslist.com
Every containership in the world is judged by the size of its

teu capacity of transporting manufactured goods
transport. His converted tanker, Ideal X, which left Port Newark
on April 26, 1956 for Houston loaded with 58 containers
each 33 ft long and 8 ft high, is regarded as the worlds first
containership.
Some claim that Canadians were ahead of Mr McLean and
the concept of containerisation, with the White Pass and Yukon
Route Co developing a container that could be transferred
between ship, train, and truck a year or two earlier. But the first
planned sailing was severely delayed, leaving Mr McLean to
claim his place in history.
Either way, North Americans were at the forefront of a very
simple idea that transformed the shipping industry through
the mass transportation of just about everything we buy in the
shops and supermarkets today from clothes, furniture and toys
to food, toiletries and electrical goods.
Liner shipping, with vessels operating to published
schedules in much the same way as bus services, was already
well-established by the time containerisation started to make its
mark on the modern world.
For more than 60 years, shipowners had been forming
themselves into conferences, pooling their ships into jointly
operated services so that customers could rely on regular
sailings. They also agreed to charge the same freight rates to
ensure that shippers did not face different prices for moving
their cargo, depending on whose ship was in port, the time of
year, or vessel utilisation.
77
30/01/2014 14:13
TRADE
Containers are the most convenient way of transporting manufactured goods

The whole purpose of conferences was to offer dependable
services and stable freight rates, regardless of seasonal factors
or market conditions, in an era when individual shipowners did
not have enough vessels to operate a service between the Far
east and europe, say, on their own.
The first in the world was the india Pakistan ceylon
Bangladesh european conference, established in 1885 and still
active until shortly before the european commission removed
carriers antitrust immunity in the european trades five years ago.
still changing
A glance through croners World Directory of Freight
conferences, is a reminder of just how much the industry has
changed over the past few years. not only have the heavyweight
conferences such as the Far eastern Freight conference and
Trans-Atlantic conference Agreement vanished, after years
of battling with the european commission, but dozens if not
hundreds of smaller conferences have also gone as a result of
regulatory changes in parts of the world.
These days, the global container trades are dominated
by about 20 major carriers which now appear to be engaged
in a new form of consolidation as opportunities for full scale
merger and acquisition opportunities fade. instead, the leading
trio is hoping to set up a giant vessel-sharing agreement
encompassing the three major east-west trades, while the halfdozen members of the G6 alliance are aiming to do something
similar.
But it is the phenomenal growth in ship sizes that has
really fired the imagination. From early capacities of just a few
hundred boxes to the arrival of the worlds first 6,000 teu ship in
1996, vessel capacity grew steadily larger,
even so, a booklet published by Delft University in 1999
78
shutterstock.com
setting out the designs for an 18,000 teu malaccamax ship

seemed a little far-fetched.
not any more, with 2013 marking the arrival of the worlds
first 18,170 teu ship, Maersk Mc-Kinney Moller, after the Danish
shipowner of the same name who had died a year earlier just
before his 99th birthday.
More units of this capacity will be delivered over the next few
years to carriers including Mediterranean Shipping co, United Arab
Shipping co and china Shipping container Lines, with at least 56
ships, branded post-enhanced new panamaxes, expected to be
in service within a few years. The tongue-twister name describes
ships that will be too large for the new Panama canal locks that
are due to open in a year or so, even if the Panama canal Authority
relaxes its current 49 m beam restriction. in theory, ships of up to
51.5 m could go through. But there are some constraints because of
the fact that vessels will be guided through the locks by tugs, which
need extra space, rather than by rail-mounted tractors.
either way, the container shipping industry will have to come
up with some different terminology as it enters a new era of
super-sized ships, with many predicting that the first 20,000
teu vessel is not far off. commercial rather than technical
considerations will be the deciding factor.
The current terms of panamax and post-panamax refer to ships
that either can, or at too large to go through the current locks,
with the cut-off at around 5,000 teu, depending on design.
Very soon, some 1,600 ships currently classed as
post-panamax will be able to transit the Panama canal, according
to Lloyds Register calculations. They will therefore become
panamaxes.
But few could have imagined that ships with nominal
capacities of more than 20,000 teu would become a reality when
the three-letter acronym was first coined some 45 years ago. n
www.lloydslist.com
29/01/2014 14:00
TRADE
containers and trade

Despite changing trade patterns, containerisation remains the backbone of shipping.
By Damian Brett, senior reporter,

Containerisation International
He shine may have come off the container shipping

industry over the last few years as a result of
chronic overcapacity but it still remains a fact that
annual volumes have declined only once since
trucker Malcom McLean hit upon the revolutionary idea of
transporting goods in steel boxes.
The growth and success of the industry is perhaps best
encapsulated by comparing the carrying capacity of
Ideal X, a converted oil tanker that became the first ship
to carry Mr McLeans famous steel boxes, with a
capacity of around 58 containers with todays 18,000 teu
behemoths.
Since ideal X sailed from new Jersey to Houston in 1956,
the container revolution has not just changed the face of
shipping, many suggest it has changed the world by being
one of the key enablers of globalisation.
However, at the time of its development many had suggested
that containerisation was relevant only to niche markets.
Looking to the future, it is hard to imagine a world
without containers on our roads, rails and oceans, but there
are some developments that could further dull the gleam of
containerisation.
Annual volumes have declined only once since trucker Malcom

McLean hit upon his revolutionary idea
www.lloydslist.com
The first represents a partial reversal in the globalisation

process.
it goes by a range of monikers, such as nearshoring,
nearsourcing, onshoring, rightshoring and reshoring, but
it basically involves moving production closer to the final
market in order to improve supply chain responsiveness,
reduce transport costs and escape the increasing cost of
producing in china.
The impact on container shipping of moving production
closer to the final market is obvious as it reduces the need to
use shipping in favour of overland transportation.
even if shipping is still the preferred option, the distance
travelled per container can be greatly reduced, which would
affect shipping line revenues.
There is often debate regarding the trend, with some
suggesting that it is a lot of hype about nothing, while others
insist the trend for nearshoring is on the increase.
A recent survey by the UK governments Manufacturing
Advisory Service found that over the last year, 15% of the
countrys small- and medium-sized manufacturers have
moved production back to the UK or are in the process of
doing so. This is up from 4% a year ago.
changing destinations
Head of the Manufacturing Advisory Service Steven Barr says:
This marks a major change in approach from five years ago
when Asia and eastern europe seemed to be the destinations
of choice.
Buyers have realised that there is more to the landing
price than meets the eye, with delays in logistics and issues
around quality adding a whole layer of hidden costs.
it appears that bringing production back is having a
really positive impact on the bottom line, with 68% of firms
that have reshored in the past twelve months reporting an
increase in sales.
This trend appears to be repeated in many of the leading
western economies.
A recent survey carried out by supply chain consultant
Tompkins international found that 44% of respondents,
mainly from north America, were planning to relocate
sourcing or manufacturing to the US, while 41.7% said
79
29/01/2014 14:00
TRADE
Many people are talking about nearsourcing but not many are actually doing it
they were considering moving to Mexico and 11% to South
America.
However, Tompkins international principal Michael
Zakkour says that many people are talking about
nearsourcing but not many are actually doing it.
The survey went on to reveal that 0% of respondents
actually had extensive nearshoring plans, 0% had significant
nearshoring plans, 20% had moderate plans, 35% had some
plans and the remainder had no plans.
Mr Zakkour says the decision on whether to nearsource
needed to be made based on total delivered costs and future
consumption volumes.
He gave the example of one company [that] considered
nearsourcing but it found china would soon become its
second largest market, and so moving manufacturing didnt
make sense.
bringing it home
Another found that many of the the components used to make
the final product were largely sourced from Asia, so moving
manufacturing would actually increase the total landed cost.
However, for certain products it could make sense to
manufacture in the final market because of shipping savings,
he says.
80
shutterstock.com
one company [that] considered

nearsourcing but it found china would
soon become its second largest
market, and so moving manufacturing
didnt make sense.
He points out that Apple has recently moved some
manufacturing from the Foxconn site in Shenzhen to the US
and Lenovo has moved some manufacturing of Pcs from Asia
to california.
However, these were high end products and represented
only a small percentage of the two companies total SKUs.
The majority continued to be manufactured in Asia where
low cost, high quantity products can be quickly and cheaply
produced.
it also made sense to manufacture larger products closer
to home such as ATMs and lighting units because the
shipping costs of these is much higher.
However, Mr Zakkour points out that china is not yet in
a position to lose its place as the worlds manufacturing
powerhouse. The economy is reliant on the manufacturing
www.lloydslist.com
29/01/2014 14:00
TRADE
Nearsourcing is not a major threat to container shipping at the moment

industry while the government attempts to transition toward an
economy focussed on domestic demand rather than exports.
Until the transition is complete, the government is likely to
use its cash reserves to support its manufacturing industry if
necessary.
He adds that many countries that could become rival
manufacturing centres simply didnt have the transport
infrastructure or expertise to compete with china.
While there is no doubt that increases in the cost of
manufacturing in china is one of the main reasons for
companies to review their supply chain, it is not the only
reason.
Shipping consultant Drewry says nearsourcing is fuelled by
the need to offer more made to measure goods that can be
delivered to market a lot faster than from Asia.
For example, a car or computer with a limited range of
options doesnt sell as well as models that can be sourced from
closer to home with a wider range of extras.
While the problem can be overcome by increasing stock
levels locally, it doesnt deal with the faster trend cycles now
confronting retailers, Drewry says.
www.lloydslist.com
shutterstock.com
Stocking up on green shoes when the current fashion

is for red boots is a sure way to lose money, as prices then
have to be heavily discounted to keep the goods moving.
Moreover, keeping more stocks in developed markets,
where labour and rents are more expensive, is a costly
business.
no threat
But Drewry is of the opinion that nearsourcing is not a major
threat to container shipping at the moment.
its impact on deepsea ocean carriers is unlikely to be
significant in the short term. These are desperate times for
consumers, so cheap prices from Asia are more important than
before.
Predicting the situation after that is dangerous due to the
uncertain growth rate of internet shopping, which will soon
demand same-day delivery.
There is some evidence that the rising cost of
manufacturing of certain products in china is shifting
production to other Asia economies, rather than moving to
another continent entirely.
81
29/01/2014 14:00
TRADE
A recent study by trade intelligence provider Piers revealed

that chinese exports of apparel to the US in terms of teu
volumes increased 7% in 2012 (January to September), while
Vietnam experienced 21% growth and cambodia 5%. The
nearsourcing location of el Salvador benefited from 11% growth.
Meanwhile, footwear imports from china to the US declined
18% in 2012 (January to September), from Vietnam they
increased 2% and Mexico saw a 33% increase in exports of
footwear to the US by value.
For the final category, furniture, chinas exports to the
US was flat in terms of teu volume growth in 2012 (January
to September), Vietnam saw a 24% increase and india saw
a 28% increase. Mexico saw a 27% increase in terms of
value.
Report author Mario Moreno says: chinas strength in
labour-intensive export manufacturing is waning as factory
wages rise at a double-digit pace and labour shortages deepen.
A rising yuan does not help the situation either.
Although it will take many years for china to lose its top
spot of worlds largest exporter of footwear and apparel, it is
becoming highly clear that a new trend is developing in the
sourcing shares of these labour-intensive goods.
Another emerging trend that some have warned will have
an impact on container shipping is the development of 3D
printing, which is the process of making a solid object from a
digital model by printing successive layers of additives, in a
similar way to how a printer layers ink on paper.
3D printing can be used in a range of industries, from
automotive and aerospace to medical and fashion. its uses
could range from enabling consumers to print products in their
own homes or by allowing customised production and pull
manufacturing supply chains.
While many talk of this as the future of manufacturing, it has
yet to have any impact on container volumes and some argue it
never will.
short lead times

This is where goods are pulled by end customer demand
rather mass produced. For it to be successful, leads times
must be extremely short and would require manufacturing to
take place close to the end market with flexible, small scale
production.
This is the exact opposite to the mass production model,
where economies of scale are generated by manufacturing as
many of the same product as possible.
At present 3D printing can only be used for limited materials,
mainly plastics and resins, but printers capable of producing
metal structures are beginning to emerge.
Foxconn president Terry Gou says 3D printing is a gimmick
and that it is unsuitable for mass production.
He points out that 3D printing may be one day able to print
the components of a mobile phone but humans or robots would
still be needed to assemble the parts.
82
although it will take many years for

china to lose its top spot of worlds
largest exporter of footwear and
apparel, it is becoming highly clear
that a new trend is developing in
the sourcing shares of these labourintensive goods.
Despite this, it seems that every week another company has

revealed plans to invest in 3D printing.
in november, jet engine producer Rolls-Royce announced
it was gearing up to print components for its engines in order
to speed up production and make more light weight parts. The
move would also allow the company to cut inventories and lead
times.
This follows General electric recently saying it planned to
expand the use of 3D printing, including the fuel nozzles for jet
engines.
At present, it is impossible to estimate the impact that
3D printing will have on container shipping but to dismiss
it entirely would perhaps be as short sighted as those who
dismissed the development of containerisation as being
suitable for only niche markets.
in the meantime, it is only possible to track the various
announcements made by companies regarding their
investments in the technology.
And it also remains to be seen whether these two
developments will actually result in a contraction in container
volumes, or if they will just limit growth.
APM Terminals chief executive Kim Fejfer suggests there are
factors much larger than these developments that will ensure
container volumes will continue to grow.
if you talk about the major trends that are relevant for this
industry, we very quickly get into demographics, so where will
you see population growth in the future, he says.
We have roughly 7bn people in the world today and
in 20-30 years time, this will have grown to 9bn and the
middle class will grow from 2bn to 4bn people and there
will be further urbanisation with people moving into bigger
cities. This has implication for the transportation of food
and water and energy.
Fundamentally, we believe trade will continue to grow and
trade will grow faster than GDP.
When you add all of this up, we believe that trade, and
container transportation in particular, is still an attractive
industry in terms of growth. n
www.lloydslist.com
29/01/2014 14:00
TRADE
more than a commodity

Container lines must look towards customer service to prosper
By Flemming R Jacobs, chairman, Econships
AViGARe necesse est but there is more to it than

that. in the shipping business stakeholders need
also to get a proper return. Many may argue that
will be dictated by the market. it could be, but not
necessarily.
There are those who consider that providing container
services is a commodity. if that is the frame of mind, that
will be the case. A standard potato is a standard potato
for which you get a standard price. in other industries
suppliers of products and services constantly differentiate
and seek to value add and achieve a premium price even
for potatoes. customer service has become a process.
That is how it should be: using technology to streamline
and make back-office service flawless and cost efficient,
but not at the expense of direct customer contact and
actual customer relations. customers all have different
needs and requirements. By serving these well and with
constant attention it will not be a commodity in the eyes of
a customer, and discussions will not be just on price. This
territory seems more and more to be left for forwarders to
explore and profit from.
There are those who consider that the market dictates
the price if you let it, it will. container service providers
need to take charge of pricing just as its customers do
Customer service has become a process
www.lloydslist.com
in their businesses. Frequent announcements of rate

increases are often only to be followed by freight rates
actually decreasing. So who is in charge of pricing in this
industry?
Try to book a flight after having checked prices and
availability a few weeks earlier and you find that the price
has increased significantly because of now being nearer
the departure date. in container shipping, the closer to the
departure date, the lower the freight rate. even rate contracts
are in some instances subject to indexes if lower. The
industry inherited the basic pricing system from converting
break bulk rates to box rates. The value add part is now
missing.
There are those who consider that a competitive
differentiator is having the lowest unit cost. i strongly
agree, but at some time even cost efficiencies will run
out of runway. The industry needs do develop pricing
expertise, and it will have to be executed from the top in
the organisation. The volume game relates to costs.
The shipping industry, particularly container shipping,
embarked on reducing carbon footprints even before fuel
costs necessitated slow steaming. More can, and will be
done. it will be wise to be on the front foot in this respect
and prepare for when customers will look to speeded up
supply chains again. n
shutterstock.com
83
29/01/2014 14:00
trade
Turning threats to opportunity

despite uncertanties and regulatory hurdles, the tanker market will continue to improve.
By Katharina Stanzel, managing director, Intertanko
anker shipping is not in a good place right now.

Charter income has been bumping along for several
years below direct daily operating costs. Demand for
tankers is struggling to increase more than 1% a year at
a time when tanker supply is increasing by over 5% a year. But
that is tankers. The tanker owners have not forgotten just how
good the market was in the mid 2000s and blame themselves
for over-ordering to replace single-hulls when times were good.
nevertheless, it is important to recognise the serious
threat that freight incomes at, or below, vessel operating
costs pose to the future of tanker transportation. Operating
tankers has become an unsustainable activity where only
the strong will survive to the next upturn.
REBALANCE RELATIONSHIPS
natural selection? Survival of the fittest? How has this
market evolved to produce a slump worse than that of the
1980s? Tanker owners investment in modern tonnage
offers a tanker fleet that averages less than eight years old.
Independent tanker owners must continue to improve

best practice
84
Demand for tankers is struggling to

increase more than 1% a year at a time
when tanker supply is increasing by
over 5% a year.
Today, tanker owners have more regulatory/environmental
pressures than ever before (such as ballast water
management and air emissions control). With the need for
investment and external pressure comes the most damaging
factor uncertainty. Uncertainty about exactly what is/will
be required of them, both operationally and financially, and
more important, uncertainty over when it will be required.
and yet out of this threat comes opportunity. The
opportunity for tanker owners to rebalance their relationship
with charterers which has over the years tipped away from
them. Tanker charterers enjoy the benefit of paying freight on
completion of discharge (unlike the dry bulk and gas sectors
where most of the freight is paid at the start of the voyage),
and demurrage upon receipt of owners invoice. Charterers
expect owners to finance the whole voyage, so it seems right
and reasonable for freight and demurrage to be paid promptly.
Instead, our charterer-specific statistics on freight and
demurrage payments show a worsening trend towards
chronic late settlement freight 5-10 days late and
demurrage 3-12 months late. This unbalanced risk sharing
devastates owners cashflow and has a direct effect on their
working capital requirements. We believe it is vital that the
whole payment situation is addressed, and at the very least,
contractually agreed settlement terms are adhered to.
Lloyds List was already 150 years old when tanker
shipping started out with the Gluckauf in 1886. But despite
some major setbacks, it has evolved into a resilient industry
that the world depends on to transport its energy in a
safe, clean and efficient way. We want independent tanker
owners to continue to improve best practice and to be
able to invest in the future, for the benefit of all, until the
younger generation invents a better way of transporting
millions of tonnes of liquid energy. n
www.lloydslist.com
30/01/2014 14:14
TRADE
a big crisis leads to big reforms

Todays downturn in shipping markets will be reversed by changing attitudes
By Li Shaode, group chairman, China Shipping
ince the second half of 2008, the international

shipping industry has sunk into an unusually
constant downturn. Meanwhile, a profound change
has been bred. Shipping companies are now facing
a series of difficulties: market volatility is intensifying with
freight rates lying beneath the break-even point on a long
term basis; the severe excess capacity problem has not
been eased and companies operating risk continuously
increases.
Moreover, the persistently high international oil price
has putted shipping companies under multiple pressures of
low freight rate, high oil price and high operating costs. The
shipping industrys winter is long and cold.
However, the historical experience shows that every big
crisis inevitably contains big reform and innovation. The
bigger the crisis faced, the stronger the needs for reform, as
well as the motivation for innovation.
it is expected that shipping industry will break the current
industry boundary, market boundary, service boundary,
client boundary and enterprise boundary, and undergo three
transformations in terms of business mode.
The first transformation is from ships competition
to chains competition. After all, marine transportation
is only one link of the supply chain and industry chain.
Therefore, in order to fulfill the clients ultimate needs,
shipping companies should extend their service from
both ends of the route and promote chain-to-chain
competitiveness.
economic globalisation determines

that innovation is the only way out
of the crisis and the key to fulfill new
aggregation and new development.
The second transformation is from the single enterprise

competition to the enterprise cluster competition. With the
aid of integrated resources, companies can make joint efforts,
build up cluster advantages, create a business platform that
includes complementary enterprises, co-operative enterprises
and alliance enterprises and construct a co-operative network.
These important methods will help shipping enterprises
breakthrough the adversity and implement the strategic
transformation. Shipping alliance is a good example.
The third transformation is from traditional operation
mode to platform economic mode. The information tide
made up by new elements, such as big data, e-commerce
and wireless networks, will surely have a great impact on
the traditional trade mode and affect the business mode of
shipping industry as well.
The new trend will be: big data drives big service, big
service drives big logistics. Thread decides outlets, ideas
regularise behavior. economic globalisation determines that
innovation is the only way out of the crisis and the key to
fulfill new aggregation and new development. n
Marine transportation is only one link of the supply chain and industry chain
www.lloydslist.com
shutterstock.com
85
29/01/2014 14:00
Congratulations Lloyds List on 280 years in print!

We wish you every success for your digital future
Pacic Basin is a leading owner and operator of modern Handysize and
Handymax bulk carriers
Headquartered and listed in Hong Kong, our global network of oices
enables us to know and understand our customers needs so that we
can oer a localised and tailored industry-leading dry bulk freight service
P56-96_Trade.indd
86
Untitled-1 1
29/01/2014
14:00
17/12/2013
14:02:32
14:02:32
trade
Unusual definitions
Brokers have been at the heart of shipping since Lloyds List began
By the Institute of Chartered Shipbrokers
homas Devitt of shipowners Devitt and moore gave

his opinion of a shipbrokers attributes more than a
century ago. a shipbroker was born and not made, as
he had to possess so many qualifications, and above
all had to be a man of action and capable of holding the
balance between his clients effectively and intelligently.
at the Institutes launch more than 100 years ago,
howard houlder, founder of the shipbroking firm of the
same name, said:
a shipbroker must be diligent and painstaking, and
careful in carrying out the instructions of his principal. The
work of the broker should be lifted from a mere haphazard
trade into the dignity of a profession.
he went on, he would be good looking and of imposing
presence. he should be physically strong, athletic and have
a first-class education.
To laughter from the audience, he added, he must know
everything; he must be a fluent talker. he must have the
faculty of clear expression, and in what he says he must be
to the point.
other qualities include infinite tact, caution and
watchfulness. he must be careful in advice giving it more
by suggestion than otherwise, so that when the decision is
arrived at, it is due not to the skill of the broker, but to the
wisdom of the owner who arrives at the decision.
The Institute of Chartered shipbrokers was established
in 1911. It received its Royal Charter in 1920. other
professional bodies have been established longer; naval
architects in 1860, accountants and surveyors in the 1880s,
and some not as long, the Royal Institute of Navigation was
formed in 1947 and was granted Royal Charter in 2007.
all these august bodies were founded to fill a need,
usually educational. In the shipbroking community, it was
established to put together a basic mixture of industry
knowledge, procedures and ethics. at that time most of
the worlds shipping contracts were concluded in Londons
Baltic Exchange. There was a daily congregational mix of
shipbrokers, shipowners and charterers. Verbal deals were
struck and when the days session closed, the brokers would
return to their offices and draw up contracts which accurately
reflected the days negotiations. This activity of trust was
embraced within the Baltics motto our Word, our Bond.
www.lloydslist.com
The work of the broker should

be lifted from a mere haphazard
trade into the dignity of a profession.
With its mentoring and educational aims, the Institute

adopted the same motto to underline its ethical and
professional aims. on the educational side, annual
examinations were introduced to test applicants on their
knowledge of the industry. successful candidates were
entitled to call themselves Chartered shipbrokers. a further
set of exams could elevate them to become Fellows of the
institute.
at first, membership of the institute was restricted
to residents of Great Britain. But in the early 1980s,
the ruling council decided to open the institute to
citizens of any country in the world and also to company
membership. at the same time it embraced the whole
profession of shipbroking. This included chartering, port
agency, sale and purchase, liner chartering and so on. This
led to changes in the bye-laws which became part of the
institutes new supplemental Charter presented in 1984
and approved by the Privy Council.
This occasion led ultimately to the establishment
of numerous branches on every continent. Its distance
learning courses were introduced and examination centres
established. Its publications have 16 titles in its educational
arsenal, covering all the exam subjects, many updated and
reprinted every year as the industry evolves.
In its early days, in 1915, the institute appointed 170
members and membership increased to 237 in the next year.
In april 2013, there were more than 6,000 exams due to
be sat, in 96 examination centres worldwide and by more
than 2,600 students.
Nowadays, with six years to go before the centenary of its
Royal Charter, it has extended its reputation as a uniquely
professional body in its field. Its source of first class maritime
knowledge has been spread to all emerging maritime centres
abroad. The success of the Institute of Chartered shipbrokers
has been remarkable. It has truly come a long way. n
87
30/01/2014 14:14
29/01/2014 14:00
TRADE
trading places
The Baltic Exchange and Lloyds List have both changed with the times
By Jeremy Penn, chief executive, Baltic Exchange
iKe Lloyds List, the Baltic exchange has been around

for a long time, seen many changes to the way it
operates, and has always been very much at the heart
of the global shipping markets.
Lloyds List and the Baltic exchange both emerged in the
18th century as London became the centre for the worlds
trade. Britain was developing a global trading infrastructure
based on trading venues. These many exchanges were based
on a set of formal and informal rules, customs and practices
and supported shipping by disseminating information,
reducing uncertainty, and mitigating transaction costs
associated with shipping. From grains to spices, London with
its growing docks and expanding empire, was at the heart of
international trade.
The Baltics early days

in its early days the Baltic was as much about commodity
trading as it was about shipping. it emerged from a coffeehouse where merchants and shipowners would meet to buy,
sell and arrange transport of hemps, seeds and timber within
a venue whose members were bound by the motto our
word our bond. By the 1920s a trader could charter a ship,
buy a cargo for it, and hedge against adverse future price
movements in the commodity all in a visit of a few hours to
the Baltic.
Key to the success of any exchange is information and
Lloyds List helped provide the information needed by
www.lloydslist.com
brokers and charterers on the trading floor. Details of

vessels, cargoes, fixtures and casualties published by
Lloyds List were, and continue to be, vital to the smooth and
efficient functioning of the shipping market.
The Baltic trading floor was where all the action took place
and a Lloyds List journalist was assigned the Baltic beat with
the task of talking to the shipbrokers and getting the stories
behind the fixtures. Many Lloyds List journalists started their
careers as cub floor reporters and soon learnt to navigate the
intricate formalities and customs of daily life on the trading
floor as well as get the shipping news.
But times change and the need for a daily visit to the
Baltic trading floor diminished to a weekly one and then not
at all. The most efficient way for a shipbroker to fix ships and
get a sense of market rates was to stay in the office and not
circulate around a London trading floor. The Baltic closed
its trading floor in 2002 and focused its attentions on the
provision of freight market information.
Accurate, independent and timely information is the
lifeblood of any marketplace and the shipping markets rely
on the Baltics daily dry and tanker assessments to conduct
their business. The Baltic also provides daily fixtures,
forward curves, options pricing and freight market news.
But like Lloyds List, or indeed any information provider, the
Baltic exchange has had to rise to the challenges and opportunities
offered by the information age. companies across the bulk freight
markets rely on an independent assessment of various routes and
vessel types. The Baltic exchange has developed an infrastructure
which allows its daily information services to be disseminated
directly to members and subscribers; sold to news vendors and
used by clearing houses to settle trades. The infrastructure offered
by the internet has enabled the Baltic exchange to be so much
more than a London institution and has similarly enabled Lloyds
List to reach readers around the world.
The 21st century Baltic exchange and Lloyds List are
very different from their previous incarnations, but they
still fundamentally offer the same function: providing the
information which enables global seaborne trade to flow. n
89
29/01/2014 14:00
TRADE
tracking the historic rise

of asian shipping
Chinas influence on global shipping is large, and industry experts predict that the nation will become
even more dominant in decades to come. But it is following a course that neighbours have charted
By Tom Leander, editor in chief, Lloyds List Asia
n the great chinese novel The Dream of the Red chamber,

a magical stone crafted by the gods finds its way into
human life and changes the fortunes of those who come
across it. The stone becomes a catalyst in the decline of
one large family and the rise of others. its indifference to the
storys protagonists underscores the folly of overreaching
ambition.
its as if a magic stone had found its way into shipping.
in the past five years, the industrys fortunes have soared
and collapsed, and in the process the economic power of the
industry has shifted like industrial versions of the novels
families. Just as economic power is transferring from the
US and europe to nations in Asia, with china as the primary
catalyst, so too is the focal point of world shipping now in
Asia, with a continued shift in fortunes inevitably to come.
But there are many myths associated with the rise of Asian
shipping and the first is that it is a zero sum game, in which
the gain of shipping in one region necessarily means the
beggaring of the other. But this will not be true in the case
of china. Moreover, the diversity of Asian shipping power is
often forgotten, as is the diversity of the industry itself.
not just china

chinas influence on global shipping is large. But, arguably,
Japans shipping industry is just as influential. Beneficial
ownership of national fleets has remained largely unchanged
in its proportions since the global financial crisis that began
in 2008. Japan is now on parity with Greece and china stand
as number four after Germany. Greek owners have been
shedding ships during the crisis, while the German fleet is
still bloated as a result of the owners amphetamine reaction
to KG financing. chinas relative position has remained
unchanged for almost a decade.
Moreover, Asia offers huge variety in shipping centres
making china only part of the story. if you look at the tonnage
controlled by the top companies in each of Asias major
90
chinas role is to be the most

significant among many senior
partners. its influence should not be
underestimated, but it can also be
overplayed.
shipping nations, a snapshot of the diversity of ownership

throughout the region emerges. These major owners include
Mitsui OSK Lines, nYK and K Line in Japan; Hanjin Shipping
and Hyundai Merchant Marine in South Korea; evergreen
Marine, Yang Ming and Wan Hai in Taiwan; china Ocean
Shipping Group, china Shipping Group and Sinotrans in
china; OOcL and Pacific Basin in Hong Kong; MiSc and
Petronas (which is now building its own ships) in Malaysia;
nOL in and PiL in Singapore; Shipping corp of india, Great
eastern Shipping and essar Shipping in india, and many
more.
Diverse, indeed: a lineup that includes major container,
tanker and dry bulk owners, and many conglomerates that
operate in all three sectors. This diversity underlies the
fact that some 55% of global merchant marine transport
emanates from intra-Asian trade, according to the World Trade
Organisation.
chinas role is to be the most significant among many
senior partners. its influence should not be underestimated,
but it can also be overplayed. Like a successful eldest son
who earns an MBA and becomes a youthful millionaire from
undoubted merit and brains, observers treat china and its
economic miracle with obsequious awe. One key shipping
banker said: its as if china has won and weve all given up
and gone home.
www.lloydslist.com
29/01/2014 14:00
trade
Mehrotra: China will press its advantage

That said, China is hugely competitive. Ravi Mehrotra,
executive chairman of Foresight, believes that China, as it
develops its national fleet, will press cost advantage into
every sector it enters and will seek to dominate.
They will do as they please, and they will not make a
mis-step, he says. A case in point is Coscos heavylift vessel
division. As the government-owned shipping giant can run
ships at a cost far lower than the prevailing market rates
it could possibly price the Netherlands, which currently
dominates the industry, out of its top position in the market.
This may be possible in many sectors soon. But Helmut
Sohmen, chairman of BW Group Ltd, the holding company of
the BW shipping interests now based in Bermuda formed
when Hong Kongs World-Wide Shipping bought Norways
Bergesen in 2003 argues that Asian shipping nations, with
China at the helm, will never totally dominate global shipping.
growing pains
We all have to remember that shipping is a global
business, he says. You cant have a shift in imports without
exporters shifting, too, for example. In Asia, that shift has
happened very fast, with growth in demand, particularly for
commodities, but also for consumer products. That means
growth in industrial production and shipping operations.
In the end, its a tremendous benefit. Asia may be a relatively
new participant, but it is a new participant in a larger market
for everyone.
Underlying Dr Sohmens comment is the message that
the rise in global trade, buoyed by the rise of Asia, has
created enormous new wealth. WTO figures show a creation
of new wealth in just under 40 years that would have been
unimaginable to former generations. Its the export story that
illustrates that growth best. In 1973, world merchandise exports
totalled $579bn. Over the next 10 years, Asian tiger economies
emerged, helping push total exports to $2trn. By 2003, the
figure had leapt to $7trn. It peaked at $16trn in 2008.
The dynamism underlying the rise in Asias share of export
growth has been driven from China. That nation claimed only
www.lloydslist.com
1% of global merchandise exports in 1973. Ten years later the

figure had grown to 2.5%, reflecting the onset of economic
reforms during the regime of Chinese Premier Deng Xiaoping.
The remarkable acceleration happened only recently. Chinas
share had reached 5.6% in 2005 and today buoyed by
Chinas immunity to the crisis and another export driven
boom it has grown to nearly 10%, far outdistancing Japan
and overtaking Germany as the number one exporting power
in the world.
The fear with China, in shipping as elsewhere, hinges
on what it intends to do with its success. Many take it
for granted that China will see merit in establishing an
impregnable national fleet via state-owned shipowners
and shipyards. Recent shipping history has certainly given
Chinese policymakers the option to so. The lions share of
overcapacity in newbuildings languishes in Chinas roughly
90 shipyards.
But that option would never have existed had foreign
shipowners, the majority
European, not ordered those vessels which they are
now trying to abandon. Western owners may boast about
cancelling ships to be built in Chinese yards, says Svein
Steimler, chief operating officer at NYK Group Europe. But
those ships will continue being built and many will become
Chinese-owned and financed at a lower price. Its a gift to
China.
Suppose China does pack its shipping industry with
vessels built in Chinese yards and stranded by the crisis.
It still has to operate its fleet in the real world. No heavily
government controlled, and therefore protected, industry can
exist in an open global economy without making concessions
to other models in order to establish trade. This eventually
erodes its monolithic power to dominate markets.
Such, at least, has been the story of Japans shipping
industry. Japan started out with a government controlled
shipping industry with strategy to develop a national
fleet to safeguard the transport of commodities which it
Bejing: the creation of new wealth would have been

unimaginable 40 years ago
91
04/02/2014 16:35
trade
demanded for fast growth. Its shipowners eventually saw

merit in flagging elsewhere, and its shipbuilders began to
manufacture for sale on the open market.
Chinas approach to shipping will need to change, too.
The danger is it will overplay its hand. Like Japan, it will reach
a stage in which its companies need to diversify and vie in
global markets to sustain growth. By ruthlessly dominating
the dry bulk market, for example, it can serve its interests in
the short term. But it will also create a backlash that incites
protection elsewhere, self-defeating to its ambition of
it is important to remember that

despite chinas remarkable rise, it is
not extraordinary in the sense that it
has happened before in asia.
The Sohmens, and the free market fringe, dont seem
particularly afraid of China. They benefit from the long view,
and that view is that economic impetus that underlies the
entry of a major power in the shipping world eventually
dilutes the nationalist impulse as benefits arise from playing
in the free market.
It is important to remember that despite Chinas
remarkable rise, it is not extraordinary in the sense that it has
happened before in Asia. What distinguishes China is sheer
size of population and geography. But weve seen the story
before.
Economically, its pace of growth has been similar to the
periods of rapid growth seen in earlier decades in Japan,
South Korea, Taiwan and some other Asian countries. Chinas
economy has grown 8%-10% per year on average for 30
years. Remarkable, yes, but Taiwan chalked up average GDP
growth of 8% for 40 years. Singapore averaged 9% in the
1960s and 1970s, and almost 8% in the 1980s and 1990s.
Japan was in high-growth mode for about 25 years. Before the
1990s, unlike China during its latter-day boom, Japan had no
substantial economic shocks.
a champion industry
Pao: legendary figure
controlling rates. And its shipping companies wont benefit
from the efficiencies born of open competition, a force that
has allowed Japanese shipping firms to embrace new models
and remain competitive over decades of change.
nothing to fear
Dr Sohmen is an example of how shipping rewards the counterintuitive move. Dr Sohmen married into the family of YK Pao,
owner of the World-Wide Shipping empire and based in Hong
Kong. Mr Pao was a legendary shipping figure in Hong Kong,
and served as an informal diplomatic envoy between the UK
and Chinese governments prior to the handover of Hong Kong
back to China in 1997. Dr Sohmen led World- Wides purchase
of Bergesen, creating BW, and moved the new companys base
of operations to Norway in 2003. BW Gas listed in Norway two
years later, but delisted in 2009. Dr Sohmens son, Andreas
Sohmen-Pao, today is chief executive of BW Group.
A former investment banker, he seems to be straddling two
worlds that of the family-owned overseas Chinese business,
with a 21st century view of global capital.
92
While Chinas miracle seems to be a smooth ticking off of

8% growth year-on-year, the underlying story may be a more
common one, of boom and bust cycles. According to author
and former Economist editor Bill Emmott, in his book Rivals,
about evolving balance of power between China, Japan and
India, China appears to have been covering up its volatility in
GDP growth figures over the years, doing so via notoriously
unreliable government statistics. China has 31 regions and
provinces. In 2005, 30 of those regions reported growth
above the eventual national average released as 8%.
In other words, those regions and provinces have a mind
of their own, and this has a bearing on how China eventually
develops its shipping industry. Chinas central government
may give an overarching view of monolithic power, but it
often has little control over what many of the provinces do.
Many local Communist Party officials have their own idea of
economic management, and directly countermand the edict
from Beijing. Moreover, private companies and financial
institutions increasingly flourish throughout the country.
Shipping is a champion industry one stated by the
government to be essential to Chinas national security, in the
sense that it is necessary to safeguard transportation of raw
materials to feed Chinas growth. But that could well change
www.lloydslist.com
30/01/2014 14:15
trade
Raw materials are essential to China

over time, as the natural entrepreneurial impulse begins to
challenge and dilute the stated aims of national shipping.
Those in the shipping industry who have a historical
perspective see a pattern re-emerging. Foresights Mr
Mehrotra analyses the growth of national shipbuilding as a
function of every major developing Asian countrys attempt to
safeguard economic growth. It might be called the Mehrotra
curve. When you develop substantial currency reserves,
its a problem to keep up with inflation which is reducing
wealth, he says. Over time, you hardly get 3%. If the
government is smart, it analyses the situation as a problem
of keeping the future value of the reserves above inflation.
So countries develop a mechanism regarding manufacturing
that, even if you have to sell cheaper today, the nation will
have a regular income over the next 10 or 20 years.
shipbuilding
This was 100% true with Japan, which developed so much
in the way of reserves that they were the first Asian nation
to accumulate huge reserves in the 1960s, continues Mr
Mehrotra. They started to build bigger scales of ships,
slowly. They developed industries to make all the ancillary
supplies. When you build ship supplies, youre running a
city of 10,000 people. Its a lot more than steel plates. You
develop all the supporting machinery and everyone benefits.
Japan started building ships not only cheaper than
Europe, but also its import-export bank was the first one to
develop 8% financing over eight years for 80% of the price of
the ship. The shipowner only had to bring 20%. They started
building cheaper ships. The South Koreans jumped in, with
its Exim bank offering similar terms, but financing up to 85%
of the total value of the ship. You had to put in 15% to build
the ship.
According to Mr Mehrotra, the pricing profile of this model
improves over time. With the supply chain to make equipment
and service shipbuilding is established nationally. In a
few years time, when the owners return to have their ships
www.lloydslist.com
overhauled and serviced, that is the time that they charge

them current world prices for overhauling and servicing, says
Mr Mehrotra. The customers, essentially, have no choice. The
beauty underlying this strategy is one of sustainable income
for the nation. Even if you have sold the ship for 10% less
than the market, you have created a source of employment
and long-term income in the development of sustainable
industry, says Mr Mehrotra.
Why is shipping special in this regard? National aviation
industries are similar, but the costs of developing aviation is
prohibitive because of the technical know-how and research
and development needed.
Its much easier to become a shipbuilding nation,
says Mr Mehrotra. You need workers who can build heavy
machinery and good welding. It takes two years to develop.
Mr Mehrotra says China followed the same pattern,
beginning in 2004 through 2006. Because of the
extraordinary boom in shipping, the financing concessions
were less important. It is actually only now when, globally,
banks are not giving loans that the Chinese Exim bank
is offering the same 8% interest rates for a 10-year loan,
financing up to 80% of a new ship, he says.
Along the arc of the Mehrotra curve, India will be the next
nation to compete with this strategy. India is now developing
foreign currency reserves and almost certainly will turn
to shipping to create a long-term sustainable industry to
invest those reserves wisely. China, because of its sheer
size, will dominate but India will target South Korea as its
main competitor. As the reserves build, India has recently
been easing its restrictions against lending in dollars. Loans
made in dollars have the advantage of not affecting the local
currency.
Asian nations will follow this strategy for some time.
It nurtures the reserves because it creates not one
investment, but a whole portfolio of investments among all
the businesses that supply and service shipbuilding. It is
advantageous, too, because these are not direct subsidies,
says Mr Mehrotra. In creating an industry this way you allow
competition, and only the strongest survive.
China has become the worlds leading shipbuilder
93
30/01/2014 14:15
INSTANT
VALUE
Banks I Funds I Owners I Advisors

VesselsValue.com is the online intelligence, valuation and analytics service
used by the worlds leading banks, funds, ship owners and advisors. We have
helped our clients save time and money, reduce risk, identify opportunities
and beat their competition by basing their decisions on better data.
The service draws on advanced algorithms, big data, industry experts,
personal relationships, innovative analytics and cutting edge technology,
while always being firmly grounded in commercial reality and application.
It is continuously updated, tested and optimised and is available 24 hours
a day, 365 days a year.
We are obsessive believers in speed, usability, clarity and convenience.
Go to www.vesselsvalue.com or e-mail at info@vesselsvalue.com.
29/01/2014 14:01
TRADE
The case here is that china is to be handled with care,

but not feared, because a need to develop more diversified
industries and play on equal terms with global trade will
eventually ease the impulse towards industrial nationalism.
All nations act in self interest.
But the conditions that drive that self interest will
eventually change. china in 10 years will not be the china we
know today, says a senior London banker that has served in
the industry for more than 30 years. its rising middle class
will have new demands, its environmental problems will
increasingly strain it and it wont always have almost $2trn in
foreign exchange reserves.
China has been protecting its economic security
the case here is that china is to be

handled with care, but not feared,
because a need to develop more
diversified industries and play on
equal terms with global trade will
eventually ease.
model finance
The chinese model today resembles the industrial shipping
model of the oil majors in the late 1980s (large commodity
companies building their own ships). The majors held to this
strategy for about a decade until the environmental shock of
the Exxon Valdez disaster and a new liability risk profile made
them rethink. eventually, global competition created a new
pricing paradigm and oil majors found that it was cheaper to
shed assets and charter vessels without owning them.
The oil companies were safeguarding their own economic
security. The same might be said for china and its national
security in protecting delivery of commodities to support
infrastructure development, like iron ore and coking coal.
china currently owns a lions share of the dry bulk vessels
transporting iron ore from major shipping hubs in Australia
and Brazil. it could easily dominate in dry bulk and in other
sectors.
This is because approximately 90 shipyards in china
accounted for 38% of global newbuildings (as of 2008). This
is the legacy of the shipping boom when european owners,
led by the Germans who could finance new ships through
the KG system, went on a building spree. As global trade
collapsed last year, the ownership of those ships became
financially unviable. Most were only partially financed. if
the chinese yards, most of which are government owned
and benefit from soft loans from government-owned banks,
www.lloydslist.com
are left with cancelled ships they will almost certainly, the
thinking goes, complete them and sell them at bargain
prices to chinese shipping companies under the chinese
national flag.
The price advantage of operating under that flag has been
mentioned. There is a danger because the shipbuilding
industry is struggling, that to keep them alive directly the
government would be supporting owners and, in fact, placing
new orders so that the national fleet will be built up, says Dr
Sohmen. That could mean, in due course, that you will see a
degree of cargo preference. The thinking here: theyve put all
the money out to make the shipyards continue, so theyll want
to preserve cargoes for their national fleet it amounts to a
degree of protection.
protect and serve

To Dr Sohmen, this particular situation is not unheard of. if
this sort of scenario takes hold, part of the market access will
become closed, he says. That means weve got to struggle
to find places in other markets. This is nothing totally new.
every cabotage regime presents a similar picture. You have to
find a way to get around or participate. He adds: it wont be
the end of independent shipowning.
The question is how long that degree of protection will
be in force. Some think that it will eventually be eroded by
chinas own needs. china has both tremendous advantages
and pressures. Some 800m of its population of 1.4bn
people are at poverty level. The governments strategy is to
develop its economy from the coast inwards, driving this with
investment that far outpaces its Asian neighbours. china has
had annual investment increases of 27.7% in 2003, 26.8%
in 2004, 26% in 2005 and 24% in 2006. The rate has fallen
recently, but not by much. The purpose of this investment
should be to create growth in future output. But this does not
seem to be happening. if this strategy was paying off, chinas
growth rate would be hitting 15.5% or more, according to Mr
emmott. even given the flattening out of statistics mentioned
95
29/01/2014 14:01
TRADE
japan learned over time that to

sustain its shipping industry against
competition, it had to embrace and
interact with the world of independent
shipowning.
earlier, it appears that chinas investment in infrastructure,

industry and shipping appears to be increasingly inefficient.
capital pressure
All indications are that china will need more capital. Two
trillion in reserves is an immense number, said the senior
London shipping banker quoted previously. But it will not be
at that level forever. As it builds up its interior and tries to
sustain its mandated 8% growth, which its government has
declared is necessary to keep its population growing out of
poverty and not, incidentally, to forestall public unrest it
will need to devote more capital to the enterprise. it will have
to do so in the face of diminishing returns on investment.
Right now, china appears to have adopted a strategy
of supporting its shipping industry by owning its ships,
adds the banker. But as capital reduces over time, it is very
possible they will see the benefit of having, say, Angeliki
Frangou [of navios] or the Ofer family [owner of many shipping
interests, including Zim] own the ships and charter from
them.
Whether this point is five, seven or 10 years away is an
open question. But it will happen. When it does, the free
market component of shipping will be on the ascendency
again.
Japans experience is instructive. The world talks of
china. But Japan is still a tremendous force, and yet hardly
strikes fear in public commentary. it wasnt always so. in
the 1980s, particularly in the US, Japan was regarded as a
powerful arriviste that was going to effortlessly dominate
world markets. But Japans adventure with shipping has been
marked by a view that national interest should be tempered
with an open encounter with free markets.
Japan will hold its own because it is an island nation,
says Mr Mehrotra. Japan needs all its raw materials and
the homogenous Japanese population will always carry the
goods. To Mr Mehrotra, this is reflected in Japanese ship
investment. A major Japanese shipping company will own
20% of ship if they find investors willing to own. They then will
guarantee to charter the ship for 20 years. A company like nYK
could own hundred of ships on paper, but very few of these
amount to 100% ownership. The block of ownership comes
96
from an established set of Japanese investment partners,

many on the midlevel industrial layer.
dominate forever?
According to Mr Mehrotra: Theres no such capitalisation in
other countries. The only competition came from the German
KG system, and that capitalisation didnt work.
Whats more, Japan learned over time that to sustain its
shipping industry against competition, it had to embrace
and interact with the world of independent shipowning.
Some 89% of Japanese owned vessels are flagged with open
registries. The transition began as far back as the 1960s
when Japan rushed into its shipbuilding boom. Because of
the rise of flags of convenience and high Japanese costs,
much of Japans merchant marine fleet was chartered from
independent shipowners, many out of Hong Kong under
shikumsen contracts.
Also, Japanese shipbuilders began to be highly
competitive building for the international market. The
shipbuilders made a long-term strategic decision not to
compete with europes ailing shipyards, which had kept
a foothold by building more technically sophisticated
vessels. instead, Japan developed a specialty in building
bulk carriers, generally regarded as the simplest of
vessels. The shipyards did so alongside heavy investment
and focus on refining manufacturing techniques to
improve economies of scale and boost productivity.
The strategy has, remarkably, given the severe shipping
cycles over the past 50 years, held ground. This long-term
thinking distinguishes Japan. its no accident that a Japanese
shipowning company, nYK, is developing an experimental ship
to drastically reduce carbon emissions. Masamichi Morooka,
chief executive of nYK-Hinode Line and chairman of the
international chamber of Shipping: Being environmentally
sound will be the only way to stay competitive in the near
future.
When will china integrate into world markets, rather
than dominating them? certainly, for now, expect china
to do everything it can to defend its national interests
through shipping. For chinese shipowners, the story now
is how to maintain control of the raw material traffic helping
the shipping companies 100% owned by them, says Mr
Mehrotra. Their running costs are the cheapest. if a ship
under an independent flag costs $7,000 a day, they can
operate it on less than $5,000 a day. This is where there is an
advantage.
But heavy protection always incites a backlash, among
nations and independent buyers. chinas owners, and the
policymakers that oversee the industry, should remember
that stone in The Dream of the Red chamber. While the
fortunes of one family fall, others step in. The message is
that there is always another family and no one can dominate
forever. n
www.lloydslist.com
29/01/2014 14:01
communication at sea
29/01/2014 14:09
29/01/2014 14:09
Committed to GMDSS. Committed to

crew safety. Committed to reliability.
29/01/2014 14:09
The predictable revolution,

the demand for certainty
communication is critical for crew
By Craig Eason, technical editor, Lloyds List
T is both poignant and significant to reference how

communication technology has developed to such an
extent that it is now possible for a ships master on a
vessel in the Pacific Ocean to be able to read what has
only just been published by Lloyds List, yet would have
to wait over a week for a newspaper to be shipped from
London.
The history of satellite communication, as well as
satellite navigation, is a short 40 years when compared
to the nearly 300 years being covered in the history
of Lloyds List. But the impact on shipping has been
revolutionary.
The history of radio telecommunications at sea is, in
reality, not that much older. It was the sinking of Titanic
in 1912 that led to the introduction of much of the safety
legislation in shipping that we see today and this included
the demand for radio telecommunication.
While Samuel Morse invented Morse code in 1844 it
was the invention of radio transmissions rather than wired
one and its commercial development at the end of the 19th
century that saw it as a capable tool for shipping.
It may seem a huge step to go from Morse code and
Titanic in 1912 to the range of satellite systems in orbit
today, but it has taken barely 100 years, with the first
satellites going up only 40 year ago. Their use has now
widened and the world has changed as a result.
In simple terms the development of man-made satellites,
huge transponders and modems in space, has led to better
crew welfare, higher asset efficiency and control, and better
emergency response. Business is better, crews are happier
and lives are being saved due to the ability to accurately
place satellites in orbit round the earth.
There was a time, when satellite communication was in
its infancy, when a seafarer sat on a ship detached from
the world, relying on the art of letter writing. For some
these are recalled fondly as part of Halcyon memories of
yesteryear. For many these early years were in reality long
periods of loneliness and insecurity.
100
There is now the chance for seafarers

to be more engaged in their home lives,
despite their remoteness, to be more
than bystanders as their lifes events
pass by, the news slowly relayed to
them in ink.
Now there is the possibility to have video calls home, to

read the local news and weather reports; to stay in touch
to the same level one could if at home.
Likewise businesses can now monitor asset
performance remotely; whether it is the remote unmanned
hydroelectric dam high up a mountainside, a vast ship or
offshore structure worth millions of dollars which has to
endure years afloat, or even a Martian rover as it studies
an alien landscape.
The technology that has given Lloyds List the chance
to reach out to a new global audience, to develop a new
future, is the same technology that offers crews new
possibilities and offers businesses the possibility to retain
a direct connection with assets that are worth millions of
dollars.
We sent man to the moon in the 1960s using brains,
hope, courage and a few radio waves. We are now
connected round the world with an array of satellites and
signals that have and still are changing the way we live
and work at sea.
From The arT oF leTTer wriTing

To The connecTed crew
There was a time when there were no mobile phones,
no social networks, no internet. For young men going to
sea, the fate of budding relationships at home were often
www.lloydslist.com
29/01/2014 14:09
snubbed out by short letters, the fabled Dear Johns, the

fate of loved ones relayed to the recipient weeks after the
event.
There is now the chance for seafarers to be more
engaged in their home lives, despite their remoteness, to
be more than by-standers as their lifes events pass by,
the news slowly relayed to them in ink.
Some shipowners were proactive, were early adopters
of the first bulky, cumbersome satellite communication
tools in the 1970s. They were expensive and certainly not
for daily crew use.
Modern communication technology has spread across
shipping, borne on the back of safety requirements, and
has creating a new connectivity for the men and women
working on-board remote ships and offshore structure.
The speed with which consumer technology is
changing means it is easy to forget that in the mid 1980s
there was nothing like the networking tools we have
today, even in our homes. The world communicated with
telephones and letters that had to be hand written, and
at best typed.
Communication at sea revolved mostly around high
frequency radio. Similarly there was also no satellite
system to help with navigation until a series of secret
projects by the US military created it in the late 1970s.

Today it is ubiquitous on ships and in our smartphones.
The ability to put into space, and keep in a continual
orbit around the planet, a box of sensitive sophisticated
technology has and continues to change our lives. The
impact on shipping and ships crews is part of this, and
while it may be seen as lagging behind modern society,
the changes are going to be irreversible.
While the general consumer may not have known they
want the Internet or the latest smart phone until they have
been presented with them, most at sea know what they
want from the satellite service providers
Inmarsat was the International Maritime Satellite
Organization. It was an NGO set up in 1976 at the behest of
the IMO and was there for enhanced ship safety.
Inmarsats history may be a short period of commercial
shipping, but there is no doubting the huge influence
that the ability to uses satellite for communication or
navigation has had.
It may be pushing it to say that the creation of Inmarsat
marked the beginning of the end of the radio officer, but
it and the development of automated distress calling
services certainly were significant pushes that saw the
demise of the traditional radio officer at sea.
a brief history
Leading the mss industry for over 30 years
1979
2006
2010
Founded as an IGO
London Stock Exchange listing
Ship Equip
1982
2006
2011
1st maritime service
Land mobile broadband
Segovia
1990
2006
2011
1st aero service
Launch of inmarsat-4 satellites
1st handheld phoe
1994
2007
2011
1st land service
Satellite phone services
Approval of Ka-band satellites
1994
2008
2012
Maritime & aero broadband services
Re-org
1997
2009
2013
Stratos
2 satellite launches
2000
2009
Company privatisation
Global broadband coverage
2001
2009
High-speed data services
Launch of 3rd 1-4: Global 1-4
www.lloydslist.com
101
29/01/2014 14:09
Every ship would have a radio officer. Until VHF and

satellites, messages were sent and received through high
frequency and very high frequency signals. Listening
watches were maintained, with a two minute radio watch
every 15 minutes to listen for a mayday or mayday-relay
call, by the RO who would also be responsible for sending
and receiving official telexes and messages.
When global distress and safety service systems were
crested, particularly with digital select calling, radio
transmissions were automated and the radio officer was
no longer needed.
The art of letter writing has gone. Inmarsat Maritime
Frank Coles president, a former master mariner,
remembers his time at sea spent writing a page of a
letter a day to family and friends in a time when satellite
and radio calls were reserved for special occasions or
emergencies.
As technology advanced, its use became easier and
prices plummeted.
Mr Coles points out that the cost of a shipboard call
through a modern Inmarsat Fleet broadband unit is 10,000
times cheaper than the cost of making a similarly HF radio
call. A call that would be made from the radio officers
shack, in public and over and often with poor signal, can
Communication is crucial to seafarers
102
The Industry is at an inflection point,

according to Mr Coles. There are
some ship managers giving crews 20
minutes of email accesses a day, some
give them continual access, limited by
data volume. Others offer unlimited
access, while others offer none.
now be done in private, even over video, and at a fraction

of the cost.
Inmarsats mobile sat-phone is probably too expensive
for the average crew member, but the units size,
versatility and use demonstrated how far technology has
advanced.
While things are changing, these changes are anything
but even, standards of communication are different across
different shipping companies.
Industry is at an inflection point, according to Mr Coles.
There are some ship managers giving crews 20 minutes
of email accesses a day, some give them continual access,
limited by data volume. Others offer unlimited access,
while others offer none.
Some ship managers see crew calling and web access
as a profit centre, others see it as being so positive for
crew welfare they provide it at cost to their crews.
But the levels of access are steadily rising, according
to Mr Coles, with call costs dropping as both Inmarsat and
its smaller competitors steadily bring in new satellites and
services.
But there-in lies a potential problem. There have
already been observations that some crews spend all their
free time shut away in their cabins, stuck away from each
other, glued to their laptops, relying on their internet
access for entertainment.
While crew numbers on ships seem to be dwindling
there still needs to be interest in socialising together.
Anyone like Mr Coles, who has been at sea for part of their
career, knows the lore of seafaring cannot be learned from
a textbook or a website alone. There are experiences and
lessons of being at sea that can only be learnt through
sharing knowledge.
But while there are warnings over this and the potential
for ship collisions if navigating officers fail to pay
attention, there is a great disparity in levels of web access
with different crews. Crews from developing nations, and
that is the majority of them, tend to have more limited
access that those from developed countries.
www.lloydslist.com
29/01/2014 16:33
There is reluctance to draw too heavy a line over web

access as it is one of the key welfare developments in the
modern age for crews, and limiting access like this while
its take up is still growing may be counter-productive.
In fact, says Mr Coles, the indications are there will be a
lot more access being made available before this balance is
struck, both as the Maritime Labour Convention takes hold
and ship managers realise there is a strong link between a
happy crew and a functioning asset effective ship.
In the future though, as industry relies ever more on this
connectivity for business, there will be the means to reduce
the levels of manning on vessels as performance, monitoring
and maintenance can be outsourced. There are already a
number of voices in the industry that see robust satellite
signals as the way to develop an industry that does not
need to put crew on-board the ship; to create the unmanned
remote ship, the ultimate smart ship. The technology already
exists, and has been demonstrated. The future waits only for
industry to make full welcoming use of it.
The busIness Case COnneCTed

and COnTrOlled asseTs
While Inmarsat was originally created as a nongovernmental organisation to help improve safety through
better emergency response and to help build up crew
welfare, the ability to improve business communication
was soon realised. It is Inmarsat and the world of
There are already a number of voices

in the industry that see robust satellite
signals as the way to develop an
industry that does not need to put
crew on-board the ship; to create the
unmanned remote ship, the ultimate
smart ship. The technology already
exists, and has been demonstrated.
The future waits only for industry to
make full welcoming use of it.
automation that is pushing the next era of shipping

forward, an era that may one day result in automated
vessels with engineering forms monitoring performance
and navigation ashore.
It was around the same time that Inmarsat was created
that satellite navigation also emerged.
The first use of satellite navigation on ships was the
huge grey Magnavox boxes in the early 1980s which
The technical abilities that helped send man to the moon are being used to create business efficiency
www.lloydslist.com
103
29/01/2014 16:33
Ships are being given the spaceship treatment

would offer an approximation of a ships position when
three orbiting satellites had risen high enough above the
horizon for their positions to be helpful in giving three
cross referenced lines to plot
So there was the grey Magnavox perched next to
the open chart on the chart table and in the late
seventies the first Inmarsat A system was fitted in the
corner.
Navigation technology has developed hugely since
then. There are competing global navigation satellite
systems in orbit and others being launched. The
navigation, now commonly and mistakenly generalised as
GPS, is in our phones, our baking systems, and in many
different aspects of our ships.
104
at least one shipyard is looking to

build a ship complete with sensors and
the ability to access or receive all the
necessary data from around the vessel
to monitor its performance. ships are
being given the spaceship treatment
as the solutions become holistic not
just between one company and its
designated product.
www.lloydslist.com
29/01/2014 14:09
The huge advances in satellite positioning, and in

satellite data communications, is building up to be the
next big advance in shipping.
A key ability of satellite connectivity is to create better
asset efficiency and effectiveness. It was adopted first
by leading shipowners in the 1970s and could see the
advantages of a communication stream has become more
reliable, secure, faster and cheaper. This opportunity has
also been realised by other support organisations to offer
services to shipowners. Once a ship is connected then it
can be monitored by experts in many fields.
Engineering firms that have been using satellite to
relay data to and from remote power stations, pipelines
and airplanes to ensure their performance and safety, are
now talking to shipowners keen to realise the benefits of
monitoring the heartbeat of their vessels to ensure they
remain at peak efficiency.
The technical abilities that helped send man to the
moon are being used to create business efficiency.
It was the global crisis from 2008 that made ship
operators take a tighter control of their assets, says Mr
Coles. Operating and fuel costs needed to be monitored
and controlled better, and many saw satellite-linked tools
as a way to achieve that.
Economic difficulty is the catalyst for some to
strengthen their satellite links with their vessels.
Owners saw the benefits of monitoring their ships,
being predictive rather than reactionary when it comes
to maintenance and potential downtime, benefiting from
improved preparation and planning.
This level of automated remote monitoring is taking
hold as the structure of the shipping industry welcomes
so much outsourcing, particularly of technical and
operational competence.
Engine makers are pushing their services division, keen
to not only sell an engine, often under licence as it is built
by a third party engineering firm, but to then have the
contract to service and maintain it after it enters service.
This is a significant money earner for them, with service
revenues from shipping and a shore accounting for about a
third of one Finnish engine maker Wrtsils total income.
Another similar trend that may develop, says Mr Coles,
is with the shipyards. This is where the idea of the smart
ship is really starting to take off.
At least one shipyard is looking to build a ship complete
with sensors and the ability to access or receive all
the necessary data from around the vessel to monitor
its performance. Ships are being given the spaceship
treatment as the solutions become holistic not just
between one company and its designated product.
The attraction for the owner is lower capital investment
as the yard will be looking to secure and after sales
service where it has a long term contract to monitor and
www.lloydslist.com
industry needs to think differently

about communication. The services
that inmarsat, and others, provide
are as the conduit, the pipe, they are
not the message. Technology has
developed beyond what the legislators
have asked for he says, so it is up to
them to make rules that are more goalbased, and less prescriptive in their
application.
be responsible for the upkeep of the vessel, using satellite

connectivity to monitor the vessels performance.
Frank Coles compares this to the approach being taken
by luxury car makers. The sale of the car is one revenue
stream; the ability to monitor its performance and then
perform a quick repair is another.
This is predictive maintenance using key performance
indicators, computer systems that can detect trends in
performance that a human may not be able to detect.
Given the huge developments in shipboard connectivity
since the days of wireless radio and Morse barely a
century ago, it is understandable that engineering
gurus look to the next hundred years and can see giant
automated, unmanned smart ships sailing the oceans.
Much needs to be achieved to get there, especially
with navigation reliability and security, but there are
precedents and there is already the technology to achieve
it.
For the next moves though, many see the aviation
industry as a key role model. It has incredibly reliable
sophisticated engines and systems, along with demands
for extremely reliable communication links.
Inmarsat strives for that near perfection of network
connectivity. It boasts outages totaling only six hours a
year across all its satellites. This is a 99.984% reliability,
according to Mr Coles.
The satellites and the network systems surrounding
them are over engineered. They have to be built and
developed with high levels of redundancy and security as
once satellite is in space, repairs are difficult.
System reliability was one of the legacies of Inmarsat
being developed first for maritime safety, to help in the
need for deep sea rescues or other maritime emergencies.
105
29/01/2014 14:09
www.dianashippinginc.com
Your partners in safely carrying commodities

around the world now and into the future.
29/01/2014 12:54
It is this unique legacy that helps financially, that is

certain, and it is one that will help shipping adapt and make
use of the data revolution that is taking place around us.
There is no limit to what shipping can get out of modern
communication tools, and even the bandwidth is no longer
a constraint. New satellite systems, like the Inmarsat
Global Xpress, promise new opportunities, new bandwidth
and with it will come new ideas to ensure the connection
between the ship and its equipment and cargo remain
under close scrutiny by those that need and want to have
the control.
Distress calling: thinking outsiDe

the box-to-box approach
One of the key developments that has secured Inmarsats
position as a listed company has been its legacy as the
sole provider of the satellite component of the Global
Maritime Distress and Safety System.
Satellite communication was developed because
the International Maritime Organization, the UN body
responsible for creating international rules for shipping,
wanted a global system to enhance search and rescue.
It formed IMSO, the International Maritime Satellite
Organisation, which soon became known as Inmarsat. It
split with one part remaining as an government body, to be
known as the International Mobile Satellite Organisation,
and Inmarsat the commercial body which is now a listed
company.
The main purpose originally was maritime safety. This
remains a core responsibility, and one that Mr Coles, says
will continue to be provided at cost for the business as it
an ethical core part of Inmarsat.
GMDSS requirements came into force in the 1990s
and are across terrestrial frequencies as well as satellite,
although Inmarsat retains the sole company capable
of, and permitted to take responsible for this satellite
commitment.
This may have fuelled the demise of the radio officer,
but it has enhanced the coverage of emergency signal
reception.
Ocean going ships currently need to have an Inmarsat
C system on the bridge. It remains a stand-alone system.
This is good for Inmarsat as it certainly provides that
competitive edge as it demonstrates the companys
reliability and dependability.
Satellite competitors to Inmarsat do want to be able to
offer GMDSS in the future, and Mr Coles is keen to ensure
that if any do, they do not reduce the levels of service that
has been expected of Inmarsat.
Changes to GMDSS provision is being discussed at the
IMO and Mr Coles does however see no reason why the
GMDSS distress calling service cannot be integrated better
into a communication system.
www.lloydslist.com
Industry needs to think differently about

communication, he says. The services that Inmarsat, and
others, provide are as the conduit, the pipe, they are not
the message. Technology has developed beyond what the
legislators have asked for he says, so it is up to them to
make rules that are more goal-based, and less prescriptive
in their application.
There is no reason why the GMDSS emergency button
that is required cannot be built in to devices, even smart
phones, says Mr Coles. The method should be mandated,
not the technology.
Given wi-fi networks are emerging on ships, there
is no reason not to have a mobile emergency button,
a smartphone app with a password, which will add to
the levels of safety that can be provided. Activation of
the app will activate the database and the emergency
message transmission from wherever it needs to be sent
from.
Shipping is getting smarter, but it needs the rule
makers to recognise this and to be as equally smart in
their rule making. n
Inmarsat president Frank Coles
107
29/01/2014 16:09
Todays young seafarers expect

social media access at sea
How long will it take for affordable bandwidth to be available to meet the capability that innovators
are enthusiastically promoting?
By Peter Hinchliffe, secretary-general, ICS
he decision by Lloyds List to end its astonishing print

run since 1734 and to provide future coverage only in
digital form is of course a reflection of the way that
we now all access information. Given that Lloyds List
has unofficially always been regarded as shippings journal
of record, this is a notable watershed indeed. This is also an
opportunity to question the nature of life at sea as we navigate
deeper into the 21st century.
We live not just in a digital age but one where instant
communication is now taken for granted, including shipping
executives who now download their news via electronic devices
and increasingly get frustrated when the signal is lost for even a
moment.
But this is especially the case with the kind of high-calibre
young people that we desperately need to attract to the shipping
industry for the future, and who now regard 24-hour access to
social media and the internet almost as a kind of human right.
need To connecT
This is no less true in the emerging economies from where the
majority of the next generation of seafarers (and many future
industry leaders) are almost certain to come. One only has
to look at the extent to which almost universal access to the
internet, smart phones and social media is already transforming
nations such as China and India.
Unless the industry can eventually find a means of providing
sustained access to social media at sea, I fear it is going to be
increasingly hard to recruit the young people we need, almost
regardless of the many other attractions that shipping has to offer.
There is anecdotal evidence that this is a serious barrier to
recruitment already, not least in places like India and China.
The notion that anyone will volunteer to be excluded from all
contact with family and friends, even just for a few days at a
time, is increasingly regarded by the younger generation as
incomprehensible, let alone acceptable or tolerable.
Google has just launched an advertising campaign for its new
tablet showing how lonely seafarers are able to keep in touch with
108
Unless the industry can eventually find

a means of providing sustained access
to social media at sea, I fear it is going to
be increasingly hard to recruit the young
people we need, almost regardless of the
many other attractions that shipping has
to offer.
their families by video link a situation which for most seafarers is
far from reality even at a relatively short distance from land.
The Maritime Labour Convention has done much to help
us focus on the social aspects of shipping. Despite valid
questions about cost, I believe that the eventual provision
of more or less continuous access at sea to electronic
communication should not be regarded as pipedream. Despite
some of the hype, the development of e-navigation is opening
up discussion on ship-shore connectivity that could eventually
provide the necessary bandwidth for social purposes as well
as for operational information.
Alongside access to social communication, the next
generation of seafarers will also wish to download their
electronic Lloyds List.
What has not yet perhaps been clearly examined is the art
of the possible. how long will it take for affordable bandwidth
to be available to meet the capability that innovators are
enthusiastically promoting? There may well be genuine limits to
growth set by current satellite availability and in the allocation
of spectra for exponential demand amongst global users. But
this is an area where shipping may not be getting the priority
that it needs and deserves. This is an important issue that would
seem to warrant serious attention if we wish to recruit and
retain seafarers of the calibre and quality that we need as the
operation of modern ships becomes increasingly complex. n
www.lloydslist.com
04/02/2014 16:36
innovation and technology
P109-122_INNOVATION&TECH.indd 109
29/01/2014 14:10
29/01/2014 14:10
ABS SafeHull: a legacy in maritime safety

to a maritime industry in the midst of a data-driven technology revolution, the concept of combining
new ways of understanding and quantifying risk with the latest software analysis seems an almost
everyday idea
By Todd Grove, chief technology officer, ABS
ts hard to imagine that just 20 years ago, shorter than

the lifespan of most ships in operation, the concept of
producing a complete software-based safety system was
at the time, a revolution not just in delivery but in the
ideas it contained.
When ABS released SafeHull to the maritime industry in
1993, it precipitated a revolution in thinking about vessel design,
engineering and the development of standards whose effects
continue to be felt throughout the maritime industry today.
SafeHulls legacy to the maritime industry has three main
components.
For classification, it addressed the application of new
philosophies and technologies for structural rules. For vessel
designers, it enabled them to apply a new integrated engineering
approach to predicting loads and structural response in a
seaway. For day-to-day operations, SafeHull made a significant
contribution to improving ship structural safety at sea.
For the process and methodology of classification,
SafeHull demonstrated the means to develop Rules based on
a new understanding of the behavior of hull structures at sea,
including the ability to evaluate critical parameters including
yielding, fatigue, buckling, ultimate strength and other
possible failure modes.
For the wider shipping industry, SafeHull brought a true
understanding of the behaviour of ship structures at sea,
based on sound engineering principles that, finally, gave
naval architects around the world a method and a technology
for making better decisions about how to bring completely
new vessel designs off the drawing board and have them
perform as intended.
Before SafeHull, both the classification and vessel design
sectors were to a large extent chained to past experience
in terms of what they could do to advance hull structures.
Until then, structural design and strength evaluation were
based primarily on traditional empirical or semi-empirical
formulations for loads and strength, which were modified
according to service experience.
www.lloydslist.com
Before SafeHull, both the

classification and vessel design
sectors were to a large extent
chained to past experience in terms
of what they could do to advance hull
structures.
This approach, while effective was hardly efficient, as it

did not take advantage of the latest engineering principles
and technologies, nor was it applicable to new, larger and
increasingly complex ship designs.
SafeHull changed all that and in the process helped the
maritime industry move towards a safer design, classification
and operational culture.
predicting BeHAviourS
Using advances in computational methods in such areas as
hydrodynamics, sea-keeping and finite element analyses,
ABS developed the maritime industrys first-ever means of
realistically predicting the behaviour of marine structures
under dynamic loads at sea.
This process began with the development of the finite
element method of analysis for marine structures, a
revolution furthered by the development of the Dynamic
Loading Approach (DLA) to finite element analysis.
DLA represents a holistic approach to evaluating marine
structures, as it enables analysis of a complete hull structure
subject to dynamic loads in a seaway. By enabling designers
to perform structural analyses during design development,
DLA introduced the maritime world to design-by-analysis
methodology.
This opened completely new avenues of development in
vessel structural design, engineering and classification. ABS
111
29/01/2014 14:10
began using DLA principles to re-develop or even restate

its classification Rules based on sound, first-principles
engineering: something the shipping industry had never
seen before.
The Rules Restatement Project allowed ABS to re-develop
its structural requirements effectively from a blank piece of
paper, using the latest hydrodynamic load and structural
engineering principles, which were then calibrated against
the same service experience on which the prescriptive Rules
were based.
That meant that ABS had a full understanding of every
relevant component and safety margin, something that those
of us on the project team at the time, recognised as highly
significant.
Because a full DLA analysis can take several months, ABS
developed as part of this process an abbreviated version of DLA
able to run on a personal computer, which focused only on a
vessels cargo area (the cargo block, or 0.4L portion of the ship).
fASt AnAlySiS
This significantly reduced the time required for the analysis,
enabling application of the new criteria to become part of
the day-to-day design process. The new criteria and the
associated analytical tools including the industrys first
simplified fatigue screening tool were combined into a new
product which we named SafeHull.
But far more than being just software, SafeHull combined
the restated Rules criteria, including associated analysis
tools and the software to apply them.
Despite the hype to come years later as the dotcom boom
washed over the shipping industry, this was a real revolution
for the maritime industry.
SafeHull not only assessed designs according to ABS
Rules, it also accurately predicted where fatigue and other
structural problems would develop as the structures aged. Its
unique analytical capabilities made SafeHull far more than
just a means of checking designs against class Rules.
SafeHull was developed as a totally new kind of tool that
designers could use to realistically assess the strength of a
structure, relative to the necessary class acceptance criteria,
throughout the evolution of the design.
Through this, SafeHull encouraged innovation throughout
the maritime world and fundamentally changed the way
industry approaches hull structural design.
Before SafeHull, the industry depended on experiencebased, semi-empirical structural criteria that were not well
understood and as a result, had developed Rules that were
overly conservative in some areas and not conservative
enough in others.
SafeHull not only helped ship structural design evolve
over the last 20 years into a rational process, but because
it explicitly defined and documented everything when ABS
Rules were re-stated, has also helped ABS make rational,
112
informed amendments to its criteria as the industry and the

class society have evolved over time.
SafeHull technology is now 20 years old. But far
from simply being part of the past, it continues to be
a building block of the shipping industrys future. The
SafeHull brand might no longer be used for oil tankers
and bulk carriers these days it has been superseded by
the IACS Common Structural Rules for those vessel types
- but it lives on in the classification of containerships and
LNG carriers.
SafeHull technology has also evolved into such new
developments as the ABS Rules for ship-shaped floating
production installations, such as floating production storage
and offloading vessels, drillships and floating liquefied gas
terminals.
Most significantly, SafeHull technology is at the core of
the IACS CSR. Without SafeHull specifically, the net ship
concept and the abbreviated version of DLA the CSR
concept could not be what it is today.
Maritime technology has moved far and fast even in
an industry which is characterised as slow to adopt new
methodologies and practices but it is no exaggeration to
say that SafeHull, along with its predecessor technologies
developed by ABS, made possible modern hull structural
design and engineering as they are widely known and
understood today. n
SAfeHull MileStoneS
First time that Classification Society Rules were based
on engineering-first principles
SafeHull incorporated industrys first-ever screening
tool for fatigue
First use of the net ship concept in any
Classification Rules
First time a two-step engineering approach initial
scantling evaluation and total strength assessment
was used in class Rules
First comprehensive software suite that integrated
hydrodynamics software results with finite element
analysis
First time that class Rules were developed for double
hull tankers (SafeHull for Oil Tankers)
For the first time, class Rules addressed structural
inadequacies of bulk carrier designs (SafeHull for Bulk
Carriers)
Many SafeHull bulk carrier requirements became IACS
Unified Requirements and then were adopted into
SOLAS Chapter XII
SafeHull technology is at the core of IACS Common
Structural Rules (CSR)
www.lloydslist.com
29/01/2014 14:10
the role of class in the future

new technology and services in shipping need proper oversight
By Liz McMahon and Craig Eason
ROM the days of the coffee house where underwriters

would meet, the shipping industry has revolved
around an understanding of risk.
Insurance is about risk, and the regulations
and technologies that have developed to enhance the
shipment of goods over the oceans has been driven by a
need to reduce the risk.
Classification is about quality assurance, that a ship
is a safe and environmentally sound piece of technology.
The classification societies have developed and grown
internationally and given rise to an element of competition
amongst each other. They serve three roles of pure
classification, acting as recognised organisations, and
now offering advisory or consultancy services as shipping
sees the operational and business benefits of new
innovative technologies and services.
the classification societies have

developed and grown internationally
and given rise to an element of
competition amongst each other.
There is the element of classification, a core component

and a crucial one within the industry. Newbuildings have
to be built to agreed standards, and vessels kept to them.
This fulfils an insurance purpose as well as a legislative
one.
Class societies also represent flag state authorities as
their recognised organisations. In this respect they can
Classification societies provide subcontracted surveyors for ship inspections on

behalf of the flag states that do not have capabilities to do this themselves
www.lloydslist.com
113
29/01/2014 14:11
Ship design is becoming more technically sophisticated so rules must also be equally sophisticated
provide subcontracted surveyors for ship inspections on

behalf of the flag states that do not have the capabilities
to do this themselves.
As an RO they will inspect a vessel in accordance with
flag requirements to ensure the vessels meeting the safety
and environmental demands of international regulations
Thirdly class societies have a growing role within
the industry as advisors of future technology, design
possibilities and operational management.
This has been a key role for class as owners, yards
and ship designers look to innovation and technology to
answer some of the challenges in the industry.
A shipowner needs to have some reassurance that the
technology being installed on a ship is both fit for purpose
and safe. It may work on a ship, but is it installed on a ship
safely and properly?
Houston-based class society ABS is one of the leading
class societies, a member of the International Association
of Classification societies, and is a leading example of
a society that has activities in other industrial sectors,
notably the offshore oil and gas sector, so can often use
this expertise to across sectors.
ABS senior vice president and chief technology officer
Todd Grove points out that the role of class has changed
dramatically and is still evolving as ship designers ,
owners and yards look for technology solutions to a
114
growing range of environmental and business challenges

Classification societies continue to play a traditional
role evaluating safety but they also must adapt to meet
the changing needs of shipowners. We need to question
how we can help individuals achieve their expectations in
terms of safety for new designs.
Mr Grove said that ABS has an extensive technical
programme focused on helping businesses prepare for the
future. He explains that the challenge is to keep ABS rules
up to date and the team examines a number of technical
developments and then relates them to the rules so that
the industry has this to take advantage of.
Ship design is becoming more technically
sophisticated so rules must also be equally sophisticated.
We need to provide the tools to develop design related
software with the rules built in so that people can easily
apply the criteria, he said.
Traditionally class rules have been applied to hull
structures and machinery but Mr Grove said that now
classification societies have to make sure they are
assessing all related components. He added that over the
last few years there had been a real growth in the use of
software on board to drive individual components.
A lot of the safety on board a vessel now is embodied
in software. Our new approach is a class notation we call
Integrated Software Quality Management. This risk-based
www.lloydslist.com
29/01/2014 14:11
software development and maintenance process verifies

proper installation and monitors updates to both software
and hardware for consistency. Today we see this mainly
used in the offshore sector, but there is a growing need on
the shipping side as vessels become more dependent on
software controls.
Traditionally class issued a certificate and that was the
only contact they would have with the shipowner until the
following years survey.
Now we question how we can provide tools to
help owners better understand how their vessels are
performing throughout the year. Two examples of this are
measuring fuel consumption and installing sensors to
monitor structural performance.
Mr Grove said that ABS also wants to help industry
to design ships of the future. We want people to
take advantage of computational fluid dynamics, he
explained.
Mr Grove said that building models for physical model
tests during the design process can be expensive to
perform but CFD allows designers to do this immediately
and study and analyse the outcomes
ABS also works with universities to prepare for the
future of shipping. Mr Grove said they look at towards the
next 10-15 years and question what is coming and how
they can best prepare for that.
There is a strong focus by legislators on a vessels
environmental impact. Regulations are in place for most
discharges to sea and emissions to air, and there are
more to come. While there are independent consultants
offering services related to all of them, it has been the
classification societies that have stepped into this gap to
offer advice to owners that need to ensure their vessels
are built, maintained and operated correctly.
While there is a potential conflict of interest in this
growing role, over how the same body that earns a fee for
advisory services can then be independent of classifying a
vessel or new building as meeting regulations.
The work force and lies competence within the
classification industry.
One of the biggest challenges in the future will be over
CO2 emissions. The energy efficiency design index has
created a ship designers paradise where increasingly tight
limits will be placed on ship designs, forcing designers
and technology providers to be ever more inventive.
Clearly this requires quality oversight and this is where
the role of class will be crucial
Mr Grove said that while class has traditionally focused
on protecting the asset and people its role has evolved
to now consider how to protect the environment and ABS
places a lot of emphasis on this.
One of the key ways to support the environment
is to focus on fuel efficiency as this not only saves fossil
www.lloydslist.com
fuel, it also reduces emissions. In the advent of EEDI and

its demands in the coming years, the industry has to look
more closely at fuel efficient designs, he said.
Looking at LNG as a fuel is top of our list and we are
also looking at other forms of propulsion technology.
Class has been accused of being too collaborative at
times, the European Commission certainly thought so in
2008, but the common structural rules for tankers and bulk
carriers that IACS developed have now been harmonised, a
process in which ABS was a keen participant.
Common structural rules have been seen by class
societies as a good way to raise the profile of
There is a strong focus by legislators on a vessels

environmental impact
ship design, and the harmonised rules will no doubt do

the same.
But can rules become harmonised without losing the
element of innovation that will be needed in the future to
allow technology advancement?
Mr Grove thinks so, in fact he argues that the
harmonised rules make it easier for designers to innovate
as they can now easily see a set of class requirements that
they need to comply with, rather than struggling to met
different sets of demands from each society.
They are specific enough to be as safe as possible but
also broad enough to allow for considerable innovation,
he said.n
115
29/01/2014 14:11
the top 10 innovations to

influence shipping
What inventions have changed the course of shipping?
HILE the list is endless, a poll of Lloyds List

readers and other industry stakeholders
revealed some common themes regarding the
innovations and inventions that have influenced
shipping.
The list had to be refined to exclude innovations that
did not directly involve the ship itself but even so the task
remains daunting. The advancement of maritime technology
is often not the result of inventions for the sea, but of
inventions that were subsequently adapted for maritime use
and have made a substantial impact. This is not a definitive
list but a sample of the key highlights in the history of the
ship during the time Lloyds List. Most of these developments
seem to have been made over the last 100 years, a sign
perhaps that shipping is more adaptable to change than
critics suggest.
1. SteAM engine
The invention of steam and its use at sea solved two distinct
problems liked with sail at the time, namely direction and
regularity. No longer were ships bound to sail a course
limited by the direction of the wind, nor at risk of being
dismasted.
The ability to sail between two ports at a known speed and
with a reasonably accurate idea of arrival times helped create
the passenger liner trades and the notion of fast transatlantic
voyages. The problem was that the main fuel source was coal,
and it required hundreds of workers keeping vast boilers fed.
The first ocean crossing by a steam-propelled vessel was
in 1819, when Savannah, a sailing ship fitted with an engine,
voyaged from Savannah to Liverpool in 29 days. The first
crossing under steam power alone was made in 1838, when
two British companies sent rival ships to New York within
a few days of each other; Great Western made the trip in 15
days, arriving a few hours after Sirius, which had left England
116
Augustus was a powerful marine diesel vessel

Lloyds Register.
4 days before her. The first seagoing vessel to be fitted with a
screw propeller was Archimedes in 1840.
2. dieSel engine
Rudolf Diesel patented a design for what would develop over
time to be the modern diesel engine at the end of the 19th
century. It was licensed out to the Nobel Brothers petroleum
company where attempts were made to convert it to run off
unrefined oils. The first commercial vessel to use a diesel
engine as an auxiliary engine in a steam ship was built in the
first decade of the 20th century. Selandia was the first vessel
to be built with a diesel engine as its main power source in
1912. Suddenly vessels had a more compact easy to handle
fuel and the capability to extend their range without the need
for huge crews to shovel coal into boilers. Thus the age of
diesel was born, and before long most commercial vessels
www.lloydslist.com
29/01/2014 14:11
were using this new engine and fuel source to go further and
faster, more cheaply and with less manning.
3. iron And Steel

The first self-propelled iron vessel is believed to have been
Aaron Manby, an iron steamship built in the UK under
a French patent in 1820. The first iron vessel to receive
classification is reported to have been the London built
180-tonne iron steamer Sirius, built in 1837, followed by
Ironsides, an iron sailing ship in 1837. Steel began to replace
iron in industrial construction in the mid to late 19th century.
This was soon seen to be a benefit in shipbuilding at steel
has a lower weight than iron, allowing for reduced scantlings
and therefore more carrying capacity. In 1881, Servia, a
merchant steamer capable of crossing the Atlantic in seven
days, was the first vessel to be constructed of steel. Seven
years later Philadelphia, the first twin-screw steamship, was
built at Glasgow.
The first rules on steel construction were by Lloyds in
1888. Rivets were generally used for ship construction until
the 1940s when mass production demands saw industrial
demands for welding.
Welding was crucial in the construction of Liberty ships

Lloyds Register
names. Welding allowed shipbuilding access to a level of
mass production never seen before, with new techniques for
welding improving productivity, and safety.
5. veSSel SpeciAliSAtion
Lizzie Leslie first iron ship to be awarded class Lloyds Register
4. Welding
Out of necessity comes innovation. Welding was not a new
invention when the great wars came around, but the necessity
of building vast numbers of commercial and naval vessels
along with aircraft and other structures saw it become a
mainstream means to create a join between two metal
components quickly and cheaply. Welding was a crucial step
in the construction of over 2,700 liberty ships built in a fouryear period to 1945 at 18 US shipyards. These vessels has
a design life of five years, but famously lasted much longer
becoming the founding fleets of some of the industrys leading
www.lloydslist.com
A realisation that economies in transportation are necessary

is not something born of the latest economic cycle. As
shipping became more commoditised with the development
of steel-hulled self-propelled vessels, it soon became clear
that by designing vessels for specific cargoes or usage then
the vessels would be more profitably employed.
Tankers, containerships, gas carriers, bulkers and ro-ro
vessels developed as cargo volumes increased. The first
oil was shipped in drums in standard cargo ships and then
palletised to make the drums easier to load. The first tankers
were built in the late 19th century, although loading and
discharging were difficult. The successful development of
steam powered pumps was a key development for the tanker
industry.
The containership is an obvious development following
the invention of the container by Malcom McClean that
revolutionised general trade, and the subsequent creation
of the refrigerated container has been a significant cause
117
29/01/2014 14:11
innovation anD tECHnoLoGY
While Harrisons efforts went largely unrewarded by

the authorities at the time, it led to a surprisingly accurate
portable time piece that revolutionised ship positioning
and helped in the mapping of the new lands being
discovered.
8. communication technology
60 years of vessel evolution
in the decline of another specialised vessel, the reefer

vessel. There are various claims for the first container
ship. McLean had the 1948-built Ideal X converted in 1955,
while in the same year Clifford J. Rodgers was the first
purpose-built vessel. In 1957, Gateway City was the first
example of a modern container ship.
6. Shipbuilding automation, computer aided

deSign and cFd
The industrialisation of the shipbuilding process has oft
been ignored. While western nations during their heyday
were able to mass produce ships, particularly during
the 1940s when the war built up demand, it was the
Japanese and Korean yards that brought shipbuilding into
the modern age. Higher levels f mass production, more
skilled workers and development of the block method of
shipbuilding revolutionised the process, particularly for
standard designs.
The process of designing a vessel and constructing it
according to those designs was naturally revolutionised with
computerisation in the 1970s.
The naval architects took to computer aided design and
fluid dynamics, revolutionising the process. Naval architects
suddenly found a cheaper way to assess and pre-empt
potential designs before they were put through expensive
model tests.
7. the marine chronometer

An inability to accurately determine a ships longitude
position was considered such a huge navigational problem in
18th century England that a prize was announced for finding
a solution. John Harrison, a clock maker from the north,
realised the easiest solution was to accurately measure the
time difference between a prime meridian, in this case as
Greenwich, and a ships position or land mark.
118
The wireless radio revolutionised shipping as it firstly helped

in rescue and emergency, but also helped keep a vessel in
connection with an office, with new orders being able to be
relayed. Satellite technology took this to another level with
first voice and now high volumes of data transmitted through
satellites.
From a crew perspective satellite communication has
been perhaps the single largest maritime innovation.
Through social networks and emails, satellite broadband
has given crews the opportunity to have direct regular
contact with home. Not only can they exchange news, but
From a crew perspective satellite

communication has been perhaps the
single largest maritime innovation.
through social networks and emails,
satellite broadband has given crews the
opportunity to have direct regular contact
with home. not only can they exchange
news, but also photographs and videos.
also photographs and videos. This communication nirvana

may not be ubiquitous across all fleets, but it is certainly
spreading as ship managers and owners realise that in
todays world, caring for those that operate multimillion
dollar assets is worth doing.
Satellite communication is also offering a new era in
monitoring and maintaining those assets. New opportunities
in remote condition monitoring is heralding the age of
outsourced performance based maintenance.
9. nautical chart and ecdiS

The first nautical charts are entwined with the history of
empires searching for new lands and the development of
historical rule. They were crucial for navies and those that
had the wherewithal for superior surveys had the upper hand
when it came to military action.
www.lloydslist.com
29/01/2014 16:39
Comet : the first steam vessel
The first nautical charts date back to the 13th century

and are believed to be closely linked to the invention of the
magnetic compass.
The problem with charts was however the complication
of taking the world as a globe and depicting it on a
flat piece of paper. The standard used is the Mercator
projection which allows compass bearings to be directly
transferred to a chart. Navigational charts also helped in
being able to chart the worlds currents and winds, a great
boost in the days of sail. As surveying methods improved,
so did the accuracy of the charts, and the creation of
standards helped national hydrographic offices share
information. Next came vessel routing, traffic separation
zones and, with radio and radar, beacons to help vessels
navigate more safely. The first electronic charts were
nothing more than a screen, or rather an image of a
paper chart. This has changed and the versions being
used in modern electronic chart display and information
systems are database led repositories of information
that are updated electronically and offer as much or little
information as the navigator needs to perform the job at
hand.
10. rAdAr, ArpA And tHe integrAted Bridge

The realisation that electromagnetic radio waves were
reflected by certain objects, notably metallic ones, led
to the development of national defence systems in the
1940s in many parts of the world. Advances in detection
led to devices that could be shipboard mounted and
used, enhancing both military defence and navigational
www.lloydslist.com
National Maritime Museum
the problem with charts was however

the complication of taking the world as
a globe and depicting it on a flat piece of
paper. the standard used is the Mercator
projection which allows compass bearings
to be directly transferred to a chart.
navigational charts also helped in being
able to chart the worlds currents and
winds, a great boost in the days of sail.
safety. The term radar, from radio detection and ranging
was coined in the US in the 1940s. Radio signals were
displayed on now iconic green cathode ray tubes, where
the radar target would light and fade as the scanner
swept by.
Microprocessors in radars led to the development
of automated radar plotting aids, where target signals
could be tracked, allowing their speed and course to be
tracked, and collision threat assessed. The integration of
ARPAs and radars into bridge systems quickly advanced
with raster displays able to deliver chart and targets
simultaneously. Digitisation has now led to the delivery
of ARPA displays along with the ECDIS, creating the
integrated bridge systems that are shaping the future of
navigation.n
119
29/01/2014 14:11
Welded freighters that

succeeded in war and peace
the US had to build libertys faster than allied merchant ships were being sunk
By Nigel Lowry, Greece correspondent, Lloyds List
AR has often had a mixed effect on shipping.

The Second World War took an unprecedented
toll on merchant ships and the lives of their crew.
Yet it can also be looked back on from
todays perspective as inspiring the greatest shipbuilding
effort in history. It also established the conditions for the
industry to bounce back in the years after the conflict had
ended.
The outbreak of war in 1939 created the need for new cargo
ships to be built in the US, rapidly.
Great Britains survival depended on shipments of military
equipment and supplies, and by 1940 Winston Churchill
appreciated that the overall outcome of the war may very well
hinge on it.
In September that year the British Technical Merchant
Shipbuilding Mission arrived in the US to order 60 ships and
they brought with them a design based on a 10,000 dwt tramp
steamer that was popular with a number of British yards in the
immediate pre-war years.
The Ocean-class freighter series, which was initially
ordered from the Todd-Bath and Todd-California yards,
The official designation for the Liberty Ships was EC2-S-C1
120
the official designation for the liberty

Ships was ec2-S-c1, describing an
emergency cargo vessel of a large
size for its era, powered by a steam
engine.
after some wrangling over competing designs, became the
prototype for the Liberty Ship.
ugly ducklingS
The US Maritime Commission had been established in 1936
primarily to develop a shipbuilding programme that would
replace an American merchant fleet that was largely of First
World War vintage. But the outbreak of the new conflagration
vastly expanded the enterprise.
At first, the Commission authorised construction of 50
vessels but the fleet supporting the Allied war effort in Europe
was sustaining greater losses than expected. Building ships
faster than they were being sunk became a critical policy
objective, and one which was ultimately achieved after dozens
of new shipbuilding slipways sprouted on both the east and
west coasts of the US.
The official designation for the Liberty Ships was EC2-S-C1,
describing an emergency cargo vessel of a large size for its era,
powered by a steam engine.
A number of modifications from the British Ocean-class
design were made, the main ones being the replacement of
coal bunkers with oil-fired boilers, and the introduction of a
single mid-ships wheelhouse. However there were many other
changes, for both good and ill.
The Libertys normalised a higher standard of accommodation
than merchant seamen had often been used to on earlier
vessels. In the haste to approve standardised plans, though,
certain modifications were also the cause of accelerated
cracking aboard many of the vessels.
www.lloydslist.com
29/01/2014 14:11
Although some early Libertys lacked any protection,

later vessels were usually fitted with deck guns that offered
some defence against attack by aircraft or U-boats. With the
exception of one incident in which a Liberty famously crippled a
German warship, they were generally hopelessly outgunned if
attacked by an enemy surface vessel.
Apart from the light armaments, the design offered plenty
of open deck-space and during wartime Libertys were often
grossly overloaded by the addition of equipment and supplies
on deck.
By the time the first Liberty was delivered in September 1941
and named after American patriot Patrick Henry, officials were
speaking openly of the Liberty fleet. To an extent this was a
conscious campaign to repair damage to the vessels image
caused when President Roosevelt had called them ugly ducklings.
According to ABS, a total of 2,742 Libertys, including several
variations, were built during the war at an average cost of close
to $2m.
roSie tHe riveter

During the course of the programme, the average construction
time was halved from more than 100 days to about 50 days per
vessel. Some were built much faster as stunts, including Robert
E. Peary, which was assembled at a Kaiser shipyard in California
in less than five days.
Many factors contributed to the speed of construction,
including the deliberate choice of a simple design, the
mobilisation of a huge labour force of men and women, and
pre-assembly.
But the key was undoubtedly the adoption of arc-welding for
its speed and economy rather than riveting for the hulls of the
vessels. Welding had been introduced earlier but not until the
Liberty programme did it truly supplant riveting as the primary
means for holding steel plating together.
Emblematic of shippings post-war inability to compete with
aviation in terms of public visibility is that Rosie the Riveter
became the poster girl for womens enormous contribution to
wartime industry in the US. Rosie, as the centrepiece of the PR
campaign, worked in aircraft assembly. Briefly, shipyards came
up with a rival Wendy the Welder, based on a real worker at the
Kaiser Richmond Liberty Shipyards in California but she never
caught on to the same extent and today is virtually unknown.
About 2,500 Libertys survived the war and provided the basis
for transportation needs in the immediate aftermath, although
much of the huge armada was mothballed.
A few hundred Libertys were welcomed by Allied countries
that saw their merchant fleets devastated during the war. Under
the Lend-Lease Act of 1941, the largest number was allocated
to the UK. Italy acquired 100, and dozens also went to France,
Russia, Norway and China.
Many modern shipping fortunes can be traced back to
a single Liberty vessel. But it was only the Greek shipping
community that overall can truly be said to have seized on
www.lloydslist.com
Many factors contributed to the speed of construction, including

the deliberate choice of a simple design
the Liberty vessels and leveraged their operation to create a
powerful platform for the growth of their fleet in the second half
of the 20th century.
Greece lost three-quarters of its fleet during the war while
more than 2,000 Greek merchant seamen lost their lives.
Recognising the countrys sacrifices, Washington eventually
agreed to allocate 98 Libertys, two smaller C1-M-AVI freighters,
and seven T-2 tankers from the war-surplus fleet. Greeks have
subsequently celebrated the 100 Libertys as blessed. The
ships were acquired on favourable terms and profits made
during the post-war trade boom often contributed to the
building of large tankers and bulk carriers. Moreover, they
provided immediate work for thousands of Greek seafarers who
otherwise might have been lost to the profession.
Libertys were seen as a wartime quick fix and US officials
rather arbitrarily estimated a design life of five years, although
some operated for 40 years. The author George Foustanos
has estimated that two-thirds of the nearly 1,000 Libertys that
traded after the war spent part of their career under Greek
management.
The fleet thinned out during the 1960s, giving rise to
the creation of several Liberty replacement designs for
multipurpose vessels that were manufactured in Japan, the UK,
Germany and elsewhere.
Only a handful of Libertys remained operational by the end of
the 1970s and today there are only two that are seaworthy: the
museum ships John W Brown in Baltimore and Jeremiah OBrian
in San Francisco.
At the end of 2008, the Last Liberty the 1943-built Arthur
M Huddell was towed from the US to Greece where it has since
been refurbished as a floating museum and venue for maritime
community events, renamed Hellas Liberty.
Other late survivors are a permanently-grounded Liberty that
is serving as a fish-processing facility in the harbour of Kodiak,
Alaska, and a vessel that was converted into the worlds first
floating nuclear power plant, which has been laid up in the
James River for many years n
121
29/01/2014 14:11
innovation anD tECHnoLoGY
A class apart
Classification societies disseminate their experience and research knowledge
By Dimitris Melissanidis, founder, Aegean Marine Petroleum
lassifiCation has followed a parallel course with

lloyds listss evolution. shortly after lloyds list
was founded in 1734, the inception and foundation
of the first classification society followed sixteen
years later.
over the course of the past centuries, classification
has moved a long way forward together with the shipping
industry. from rating the condition of wooden sail ships
(classification) during the early days, to the advent of the
steam and steel ships of the 19th century, to the shipping
boom of the second half of the 20th century which introduced
many new ship types such containerships, gas carriers, VlCCs
and to the large, energy efficient vessels of the 21st century, it
has supported the innovations of visionary entrepreneurs and
ingenious engineers.
traditionally, the role of the classification societies
has been to set standards for the construction of floating
Early entries to lloyds Register
122
Traditionally, the role of the

classification societies has been to
set standards for the construction of
floating structures and to verify their
application.
structures and to verify their application. in addition,

they have promoted the safety of life and environmental
protection by enforcing the regulatory framework
established by the governments, members of the
international Maritime organization.
throughout the shipping industry evolution, classification
societies have been also very successful in setting standards
for technological innovations. such standards have made the
widespread application, testing and safe operation of new
concepts and designs easier.
However, it was only in the 1990s that classification
societies introduced innovative structural design
technologies through the application of advanced
computational tools, paving the way for unified rules and
the introduction of risk-based standards. Ever since, they
have been more actively involved in various research
projects and proposed innovative design concepts and
technological solutions.
their involvement in research provides the opportunity
for an additional link between classification societies and
shipowners. in the highly competitive shipping business
environment, innovative ideas and technologies can provide
significant advantages to those who are willing to move
forward. and the classification societies can disseminate
their experience and research knowledge in order to assist
the ship owners to better evaluate potential risks which may
be inherent to new, innovative concepts and new business
areas. n
www.lloydslist.com
30/01/2014 14:16
environment
P123-147_Environment.indd 123
29/01/2014 14:07
29/01/2014 14:05
environment
The evolution of recycling

Shipowners will prefer to work with cash buyers and ship recycling yards that offer the best combination
of price and quality
By Dr Anil Sharma, chief executive, GMS
n the past few decades the ship recycling scene has evolved
significantly. Overall, there is greater recognition of the
importance of ship recycling to the wider maritime world.
Over the years Lloyds List has played an important role in
bringing ship recycling news to the shipping world. Heres
my reflection on the historical changes to this date and what
perhaps we can expect from this sector, moving forward.
The turn of the century brought the

need for change. passionate debates
ensued on the urgent need to improve
conditions.
HisTorical developmenTs
Our greatest glory is not in never falling, but in rising every
time we fall.
Confucius
sHip recycling yards
Prior to the 1980s, Taiwan played a key role in the ship
recycling industry. In the 1980s ship recycling yards in
the Indian subcontinent (India, Pakistan and Bangladesh)
gradually took over as the dominant players in the industry.
Their ascendancy was supported by the large number of yards
Ship breaking became a symbol for negativity in the industry in

the 1990s
www.lloydslist.com
that sprung up (about 300) in this region. Regrettably, fast

and unregulated growth of these yards meant that ships were
being broken by crude means with inadequate attention
paid to worker safety and environmental concerns. In the
1990s pictures showing miserable conditions at yards, and
poor workers with inadequate protective gear breaking
ships started to circulate in the media. Ship breaking as it was
known then, became a symbol for negativity in the industry.
The turn of the century brought the need for change.
Passionate debates ensued on the urgent need to improve
conditions. Yards in China, Turkey and India began to
implement quality standards. Local governments began to take
initiative. The International Maritime Organization became
involved and after about four years of deliberations, the Hong
Kong Convention for Safe and Responsible Recycling of Ships
was introduced. The HKC, officially ratified and implemented in
2010, became the first and still is the only convention that was
developed for the ship recycling industry.
Ship prices peaked to an unprecedented industry high of
USD 800/long ton of light displacement tonnage, just prior
to the 2008 financial collapse. The scrap value of a VLCC,
exceeded $30m. Alas, just like most other markets, the ship
recycling industry saw a momentous fall of ship values right
after the financial collapse. In about six weeks, 70% of asset
(residual) values evaporated.
The overbuilding of pre-2008 record years, coupled with
the financial crisis and poor charter markets resulted in
125
04/02/2014 11:36
environment
a sharp increase in the number of ships going for scrap.

2012 was a milestone year for the ship recycling industry.
About 60m dwt of vessels were recycled in a single year;
an all-time record in the history of shipping (the previous
being the watershed year of 1985, when 42.6m dwt was
scrapped) Today, five countries India, Bangladesh,
Pakistan, China and Turkey recycle about 97% of the
worlds commercial fleet.
casH buyers
The middlemen who facilitate the sale of vessels for ship
recycling are called cash buyers, for the simple reason that
they buy ships from owners on cash basis. Cash buyers are
not brokers. They are principals. The Hong Kong convention
defines cash buyers as shipowners.
The last few decades have witnessed the unprecedented
growth of the cash buyers. It is estimated that about 98%
of international ship recycling transactions are conducted
via cash buyers. The leading cash buyers of the world buy
ships from worldwide owners and then resell to any of the
five ship recycling countries that provide the best value
(price) for the vessel. They are the intermediaries between
the ship owners and the ship recycling yards. Without cash
buyers, it would be very difficult to facilitate the record
volume of ships destined for scrap. In an industry which
recorded an annual turnover of about $6bn in 2012, the
major cash buyers can achieve sales volumes in billions of
dollars.
As their experience and clout in the industry has grown, so
has their influence in the greater maritime world. Cash buyers
have diversified in to ship owning, ship finance, offshore
industry, deep sea ocean towage, ship agency, insurance
and several other aspects of shipping. Their wide and close
relationships in shipping circles, strong banking, experience
with almost all shipping sectors dry, wet, offshore, gas,
Corporate Social Responsibility will become more prevalent
126
Workers now operate in far safer conditions

containers, cruise practically anything that floats makes
them unique players in this global industry.
THe FuTure
The only function of economic forecasting is to make
astrology look respectable.
John Kenneth Galbraith
The future promises to shine brightly for shipping and ship
recycling. As in many industries, changes can be expected.
Some of these changes are delineated below:
Life cycle: More younger ships will be recycled than
they have ever been in the past. The life cycle of ships
will shorten. It will not be uncommon for ships 20 years
or younger to be sold for recycling. Consequently, the
historical model where major owners from the western
world sold their 15-year-old ships to the Greek or Chinese
buyers will change. Most of these owners will end up
selling their ships directly for scrapping.
Value proposition: According to Warren Buffet, price is
what you pay, value is what you get. Shipowners will prefer to
work with cash buyers and ship recycling yards that offer the
best combination of price and quality. Highest price for a demo
vessel will be replaced by fair price and long term relationships.
Cash buyers will play a much bigger role in main stream
shipping by offering a wider mix of products and services in
this sector.
Corporate Social Responsibility will become more prevalent.
More ships will go to green yards (yards with Safe and
Responsible Ship Recycling practices and certificates) than
ever before.
China will build and recycle more ships than any other
country in the world. n
www.lloydslist.com
04/02/2014 11:36
environment
strength and diversity

responsible ship recycling will become increasingly important over the coming years, says GmS
By Felicity Landon, contributing writer, Lloyds List
MS is the worlds largest cash buyer of ships for

recycling. The company has concluded over 2,100
vessel acquisitions, negotiating an average of 145
vessels every year between 2000 and 2012. In 2012, a
year which broke all records for ship recycling, GMS negotiated
more than 300 vessels, while in 2013, numbers are in excess of
200 concluded transactions.
Based on the volume of its business, GMS is regarded as
the biggest ship buyer in the world. The firm has worked hard
to generate a more corporate face for ship recycling, and it has
dominated the industry for at least a decade.
GMS has offices across various time zones, in the United
States, UAE, China, Singapore and Japan, and has exclusive
sales agents in all the major demolition markets India,
Romania, Bangladesh, Pakistan, China and Turkey.
GMS is regarded as the biggest buyer in the world
www.lloydslist.com
you have to have live information and

constant feedback. We have to be able
to give the shipowner a spot-on quote
and we pride ourselves on accuracy.
The success of GMS is to do with the fact that we
are volume players and we buy all sizes and types of
vessels. We dont restrict ourselves to one type of vessel
we handle all types and we sell to all markets, says
Jamie Dalzell, a GMS trader based in Shanghai. We look
elsewhere, too, because there are other markets likely to
emerge, such as the Caribbean, Indonesia and Vietnam.
If you stand still in this industry, you are not going to get
too far.
While GMS is on the podium in terms of sheer volumes
traded, it actually has quite a tight team, adds Mr Dalzell. It
is core locations, and then local offices we all work pretty
hard. But whats important is structuring the deals correctly,
being in touch with local markets, and communication.
Relationships matter a lot.
You have to have live information and constant feedback.
We have to be able to give the shipowner a spot-on quote and
we pride ourselves on accuracy.
In terms of risks, 2013 has provided them in the
form of currency fluctuations, particularly in India and
Pakistan, and also steel price fluctuations. It has been a
challenging year things move by the hour almost, says
Mr Dalzell. You really have to be in touch to make things
happen.
Expansion is absolutely on the agenda, says Evan
Sproviero, new York-based trader and head of projects and
finance at GMS. Overall our trading has been expanding
very rapidly. We negotiate about 200 vessels a year and
handle about one-third of the ships recycled worldwide. I
do see real expansion and this is exemplified through the
127
04/02/2014 11:36
environment
opening of our new Singapore office which is headed by

Thomas Alexander.
going green
Green recycling is a particularly strong thread for GMS
and Mr Sproviero believes a lot of cash buyers will
likely fall by the wayside as environmental and green
recycling picks up. There are always going to be
tighter regulations it is maintaining the balance that
is most important, he says. It is about making sure
the regulations dont stifle what is feasible in the here
and now. Of course the world is changing and evolving,
and the industry is too. That is why GMS has been at the
forefront of responsible recycling programmes. People
increasingly require the green aspect, for their own
CSR reasons and GMS affords owners the opportunity to
properly recycle their tonnage.
GMS describes itself as an ardent proponent of green ship
recycling and was the only cash buyer in the world to participate
in the deliberations leading to the IMOs Hong Kong Convention
for ship recycling. It has set up its own Green Ship Recycling
Programme (GSRP).
nikos Mikelis, based in the UK, is the head of green
recycling for GMS. Interest in green recycling is small
amongst shipowners but it is increasing, he says. It
is primarily interest from companies that have got CSR
policies that tends to be the bigger companies in the
main, but not exclusively.
gms has been at the forefront of

responsible recycling programmes.
Interest in responsible ship recycling is coming mainly from

Japanese owners, many of whom insist on vetting yards and
examining the whole recycling process, and partly from some
Scandinavian owners.
In fact, GMS generally refers to responsible rather than
green ship recycling. Green or the environment is only
half the picture the other half of the picture is safety,
says Dr Mikelis. Responsible ship recycling is growing,
and regulations are helping. The Hong Kong Convention is
coming, slowly, slowly, but now we also have the European
Regulation on ship recycling to regulate the safe and
environmentally sound recycling of European flag ships, and
also to require, in a few years time, the carriage onboard
of inventories of hazardous materials for all ships visiting
European ports.
This enters into force on December 30, 2013 and will be
applied progressively. And if it is implemented in a sensible
way, then it will help the Hong Kong Convention, and will
accelerate that Conventions entry into force.
The long-term ideal is that responsible ship recycling
should become part of normality, says Dr Mikelis. We
only have five countries that recycle ships in any numbers;
if those five were to ratify the Convention, there is nowhere
else for ships to go, and therefore it becomes part of
normality.
arT oF persuasion
GMS is at the forefront of green recycling
128
Vagelis Chatzigiannis, based in GMSs Dubai office, is

responsible for the sale and purchase of vessels and is also
a green ship recycling rep.
From our perspective, we are being proactive we have
been promoting green, or responsible, ship recycling for
some time and we have invested a remarkable amount in the
programme.
Despite the supposedly green flavour of todays corporate
world, however, Mr Chatzigiannis says that responsible
recycling is currently specified for only 1-2% of the ships going
for dismantling.
We are trying to persuade ship recycling facilities
to develop their standards in order to be able to comply
with the requirements, but what the industry needs is
for shipowners also to show interest otherwise there is
no incentive for the ship recycling yards to invest in such
facilities.
Of course the change in the past ten years has been
remarkable. And things are completely different to what
we saw a few decades ago, such as child labour or people
www.lloydslist.com
04/02/2014 11:36
environment
working with bare hands and feet. But there is always room for
improvement.
Because at present the shipowner is not being compelled
to undertake responsible ship recycling, those recycling
yards that do take the initiative for responsible recycling
unfortunately dont get proportionate returns, says Mr
Chatzigiannis. The market is basically very competitive
and yards can go under due to fluctuations in steel prices,
currency, and so on. These fluctuations can destroy a yard
that has made expensive investments in order to comply with
higher standards.
Keeping calm in an increasingly

volaTile business
US-based Yogesh Rehani is responsible for the operational
aspects of GMSs cash buying and ship recycling operations.
If a trader wants to know what would be the value of a
ship, they need to have a starting point. I look at it and view
the details and come up with a dollar value of the vessel,
he says.
However, he emphasises, the base indicator is the market
itself and that market can see prices swing wildly from day to
day and even from hour to hour.
It is a very volatile business to be in and in the past five
years, of course, it has been even more volatile, says Capt
Rehani. Various factors make it even more so political, social
and economic. Currency fluctuations have started affecting the
business quite a bit, as have bank regulations. And once the
political situation changes in one part of a geographical region,
this can easily affect the rest.
Its a market that will never have stability, because there
are no barriers to entry and no barriers to exit, he says.
Various fly-by-night operators who have a little bit of
money can come in for a quick buck and then go out again.
In that single ship deal, they might throw in a number
that is not workable and all it takes is for one phone
call to throw the whole fabric. If one ship is subsequently
renegotiated, all the others face the same.
GMS has remained busy throughout 2013 and the business
will continue to grow, says Capt Rehani. It is how the business
is done that will change. There is more stress on green recycling,
more stress on rules and regulations, and I think only the fittest
will survive. People will realise that it isnt worth going with a oneman-band which gives the wrong number and then vanishes.
Those operating in this market need to be bold and
courageous, he says. GMS has been the leader in this
market for at least a decade. We are not gamblers but we take
calculated risks. We know when to walk away from a deal and
that is one of the reasons why we have managed to maintain
our position.
I tell everybody that GMS bridges the gap between
expectation and reality the expectation of the owner, and
the reality of the business. And we do that very, very well.
www.lloydslist.com
recycling yards that do take the

initiative for responsible recycling
unfortunately dont get proportionate
returns.
projecT business
Ship recycling will always be the companys core strength
but add together GMSs substantial expertise in shipping
and its position as a source of capital, and a logical result is
diversification.
Without question, recycling is our bread and butter
it is what the company specialises in and our roots
stretch back decades in the business. But the company
is also growing into other areas of the shipping world,
particularly with regard to projects and finance, says Mr
Sproviero.
The cash buying industry has provided opportunities
for conservative players like GMS, who have equity that is
being invested into other shipping related projects, and
we are now experiencing a diversification in our shape and
portfolio.
GMS is actively investing equity into the industry
and has set up a small team dedicated to evaluating
investment projects. Most, but not all, are shipping related
the common factor is these deals are done behind
closed doors.
A lot of the relationships we have had through the
cash buying business have afforded us opportunities,
says Mr Sproviero. We are largely behind the scenes
we dont work in the spotlight. But we have invested
sizeable portions of equity into shipowning and operating
companies and right now we are looking at a steady flow of
shipping-related projects.
While GMS offers a welcome source of equity, it brings
more than just money to the equation, he adds. As a
group, we bring knowledge and expertise to the project.
We certainly dont know everything there is to know
about shipping, but we are able to use the knowledge
gained from our core business to assess the strengths
and weaknesses of a project and try to structure deals
in a way that is mutually beneficial for ourselves and our
partners. Perhaps our greatest strength is the ability to
properly structure transactions and ensure that a healthy
deal flow is maintained at all times. The equity side of
the business is spread out around the globe. GMS will
offer potential financing opportunities to struggling
owners right up to mergers and acquisitions and this
does make the company a bit unusual yet well rounded,
says Mr Sproviero. n
129
04/02/2014 11:36
environment
shipping, the environment

and sustainability
in the modern age of consumerism shipping has been left wanting
HIPPInG is more than one industry. It is all the

industries that revolve around the biggest single
regularly constructed asset that man is capable of
building.
There are aspects of the insurance, finance, legal, legislative,
trading, technology, construction, recycling and manpower
industries that depend on the displacement and buoyancy, on
the ability of thousands of tonnes of steel to somehow remain
afloat for many years on oft tempestuous oceans.
The modern vessel is vastly different from 100 years ago,
let alone at the time when Lloyds List was first tacked to a
coffee house wall in London to entice underwriters to take up
risks related to expensive cargoes being shipped to England
on wooden sailing ships.
As modern society evolved, developed, revolutionised, so
did the vessels used for trade.
When steam power was invented, it was soon used in
a vessel, as was the diesel engine, wrought iron, steel,
rivets, welding. They were all used to advance shipping and
shipping to advance trade.
The importance of sound tonnage was soon realised as
wealthy businessmen relied on it to make their riches and
the skills of the naval architect were recognised many years
ago, though not before some spectacular historical military
failures such as the Mary Rose and the Gustav Vasa taught
painful lessons.
Yes, history is littered with failures. Historical shipwrecks
are still sought by treasure hunters keen to find lost Spanish
gold, or traces of a colonial past, for it was shipping that gave
empires their power.
Maritime history is also a process of eventual learning and
innovation. Shipping and ships have continually changed the
world, whether from a military perceptive or commercially.
Mercantile shipping and naval vessels are rarely far from
130
each other. The early trades needed defending as did the

convoys during the great wars. Today merchant shipping still
needs a military presence such as the one helping curb the
threat of piracy attacks off Somalia.
leFT WanTing
Ships have certainly developed, although many will
argue that not enough has been done during this recent
generation, a generation where a new agenda has emerged
and some think shipping, as the conduit for trade, and in the
modern era for consumerism, has been left wanting.
Society has turned a corner and the mantra of
sustainability has gained credence, becoming an accepted
way of thinking.
Sustainability, and with it corporate social responsibility,
another phrase that many still find difficult to define,
are perhaps the offspring of so much environmental and
safety regulation being developed for shipping. They are
the voluntary actions that society, and with it shipping, is
becoming expected to do, even if it is not mandated.
www.lloydslist.com
29/01/2014 14:05
environment
In the last 20 years just about everything that can be

discharged into the sea by a ship, or emitted into the air, has
been regulated. On top of the safety regulations that have
been developed over the last 100 years since, shipping is
undoubtedly the most regulated industry.
Regulation reduces risk. But regulation always comes at a
cost, and often this cost is perceived as the loss of potential
revenue of the shipowner.
But the shipowner is changing. The structure of the
shipowning company is not the same as it was 50 years ago,
certainly not 100 years ago. A world of risky adventure into
unmapped worlds has given way to one of risk management
and calculation, of media awareness, public image and
perceived stakeholder value
This is the problem. Shipping has become commercial while
generally the world has retained a romantic notion of shipping.
Too much Hornblower and not enough Discovery Channel.
Two centuries ago sounds like a long time ago. This was
when shipowners realised steam could be used at sea. It was
only 100 years ago they began building ships powered by
diesel engines, and more recently these engines stared to
use heavy fuel oils.
cradle To grave
Rudoph Diesel, the man whose name has become
synonymous with the modern engine fuelled his first
demonstration engines off biodegradable peanut oil in 1903.
The first vessel to be fuelled solely by hydrocarbon oil or
diesel oil, Selandia, was launched in 1912.
Today shipping is on the cusp of another change as
environmental regulations and commercial pressures drive the
search for cheaper, cleaner fuels and better ship operations.
But while there are the commercial realities of shipping
there is this growing need to keep ones shop clean and to
make sure it can be seen as being clean; this is the rise of
corporate social responsibility and sustainability.
CSR has become a growing force in the corporate world.
Interest in sustainability linked financial funds has rocketed
over the years. The creation and increased interest in the
Un Global Compact is testament to this. UnGC encourages
companies to sign up to a set of 10 guiding sustainable
principles. Over 10,000 companies and organisations are
signatories, some are shipping companies. Many are clients
or charterers of shipping companies and their sustainable
demands are being listened to.
In 2013 the World Maritime University hosted its first CSR
conference.
Speakers alluded to CSR as Common Sense Really,
pointing how this drive for business development and growth
in an age of demands for cost efficiency goes hand in hand
with the ideals of a sustainable world.
One of the striking aspects of the World Maritime
Universitys conference focused on the business case for
www.lloydslist.com
LNG is increasingly being used as a fuel

corporate social responsibility was the level of critical
questions from the audience.
The opening speaker was the secretary general of the
International Maritime Organization who alluded to the need
for the IMO to extend its remit to become a champion of
maritime sustainability.
The reality is that business sustainability has to make
sense for the business, and as customers change their
demands this sense is likely to arise.
The response to this will be higher demands on
shipbuilders, designers and technology companies
to develop vessels from a holistic perspective. While
shipwrights built wooden vessels unlikely to service more
than a handful of years, modern ships are ten times the size,
cost and expected to last for 25 years. The cradle to grave
approach, with the vessel being built, operated and then
dismantled in the most responsible ways possible, while of
course making the owner as much money as possible.
The future will bring new regulations; this is an era of
environmental regulations which the ships masters of the sailing
traders would have great difficulty in comprehending. Ballast water
rules, and other regulations limiting discharges to sea, there are
limits coming into force, or already in force, limiting different gases
into the air. There are rules on the coatings of the hull, the oils that
lubricate machinery. There are rules on monitoring a ship to make
sure it remains compliant and its position is known.
But regulation is only one part of this. Rules are generally
seen as the minimum standard, with some owners taking
a stronger approach to what they feel has to be done. They
often do this with a view to raising their profile and of course
business. In short leading shipowners see a business case for
selling the story of their corporate social responsibility story.
And in a modern era of instant and ubiquitous communication
and news, this CSR drive needs to be honest. n
131
29/01/2014 14:05
environment
Aspire and achieve

rakesh Khetan (Billu), chief executive of Wirana, takes a tour dhorizon of the ship recycling business,
spotting advances but also miles yet to travel
By Rakesh Khetan (Billu)
ow has regulation picture changed in ship recycling?

With the emergence of record high volumes in
ship recycling, regulation to improve standards has
mounted. We had the Basel Convention, then we
had the Hong Kong Convention in 2009 and now we have the
new European Union regulation. So now you see cash buyers
working closely with green recycling consultants and trying
to increase awareness among the recyclers. Cash buyers, at
times work very closely with some sellers who are committed
to green recycling as a part of their corporate social
responsibility programmes (very few are really committed).
Today you see a lot more recycling conferences with
discussions on the commercial as well as technical aspects,
which goes to speak volumes about how seriously the whole
shipping industry including owners, cash buyers, recyclers,
regulators, non-government organisations, lawyers,
Classification Societies etc take the recycling industry.
LL: Are there elements of the cash buying market that
could be improved?
I only wish that some of the cash buyers dont keep on
offering unrealistically high and very speculative offers which
are far removed from end buyer prices at the ground level.
From 2009 till 2012 the volumes were increasing so there was
room for all. Now that the volumes will start tapering, we fear
that the speculative cash buyers will not only hurt themselves
but in the process will potentially spoil the market.
LL: Has ship breaking addressed some of the criticisms by
environmentalists and rights groups?
The biggest problem here which everyone wants to avoid
is who will bell the cat? Everyone wants to put the blame
on the recycler saying that you have not improved standards.
But the bottomline is who will pay the recycler for making the
improvements. The owner is in most cases only interested
in the top dollar and does not want to contribute towards
the cost of making recycling green. The cash buyer today
is working on wafer thin margins and is not able to pay for
it, nor do the government regulators or the NGOs want to
pay for it. However, having said that it is not that there is
132
Very few cash buyers are committed to green recycling
no improvement in the industry. If you look at the situation

a few years back and look at it now you will find that there
has been a lot of improvement, especially in India and to
some extent in Bangladesh. There are a lot of yards that have
International Standards Organisation certifications including
the ISO 30,000 which is specifically catering to the ship
recycling industry. Quite a few yards have invested in heavy
equipment, worker safety gear, separate areas for storage of
hazardous materials. Landfills have been created in India. All
this is being done in an effort to improve standards and this
is also being acknowledged by the NGOs. However, this is
also does not mean that we have arrived and as there is still
work to be done, which I hope and believe will be done and
over a period of time we should have a very substantial part
of the recycling being done in a green way.
www.lloydslist.com
31/01/2014 09:23
Untitled-1 1
28/01/2014 11:37:06
environment
LL: How has the entry of China changed the picture?

China is a very important market and has been recycling
more than 2m tonnes light displacement tonnage annually
in the recent past. However, since the prices paid by China
are about $50 - $70 per tonne lower than the sub-continent,
it has not posed a big threat to the sub-continent. China, as
you know does not recycle ships by the beaching method.
In the recent past, a lot of ship-building yards in China have
had very slow or no business and as a result they can be used
as recycling yards. Now, this makes the recycling capacity
almost unlimited. However, in my opinion, as far as the price
difference remains Chinas capacity will remain underutilised
because although Chinese vessels going to the sub-continent
will reduce due to the subsidy, but the magnitude is not clear.
LL: Is the new ship scrapping subsidy in China significant?
How will it change the competitive mix in ship demolition?
For sure, the subsidy given to owners for recycling Chinese
flagged vessels at Chinese recycling yards is quite substantial
and provides a big incentive, however, it is difficult to judge the
impact of the subsidy as the procedure for owners and vessels
to get approvals to qualify for the subsidy is quite complicated
and expensive. Currently, very few recycling yards are approved
though several more are in the process of obtaining approvals. So
it remains to be seen how effective the subsidy will be.
LL: How did Wirana start how fast did it grow?
Wirana started in 1983 and at that time was a very small
company. It carried cargoes on its last voyage up to west
coast India and then scrapped the vessel. Over the years, the
business started growing gradually. It was slow in the initial
years almost up to about 1995, and then the volumes started
increasing. We started doing different types of vessels and
by now we have done almost every type of vessel including
the conventional tankers, bulkers, containers, general cargo,
multipurpose vessels to other different types like pure car
carriers, ferry, ropax/roro, cruise, reefers, gas carriers, submarines, research vessels, aircraft carriers, oil rigs, floating
production storage and off take vessels FPSOs, FSUs you
name it and we would have done it. Till now we have done a
total of more than 2000 vessels. On an average we do about
150 vessels a year after the global financial crisis and we are
quite evenly spread out between India, Pakistan, Bangladesh
and China (both North and South). We see ourselves as the
one-stop shop for recycling for the sellers shipowners. The
sellers shipowners dont need to worry about anything they
get very competitive price, first class performance, we can
pay high deposit amounts as our commitment to the deal and
also local matters taken care of at destination. Besides, we
can buy on delivered basis as well as on as is where is or
as is basis and we can even cater to their green recycling
needs. The sellers and Buyers alike can be rest assured that
when they are dealing with Wirana they are dealing with the
oldest and most experienced cash buyer with one of the best
market coverage, so they are in very safe hands.
134
LL: What were the milestones in Wiranas development?

There are obviously quite a few of them along the 30 years
of the existence of Wirana, but the most prominent of them of
course are the two Guinness World Records that we have for
Purchasing the largest vessels ever bought for scrapping. We
got our first one when we bought the ultra-large container carrier
ULCC Kapetan Michalis which was about 514,000 dwt and about
72,000 long tons in 2002 and then in 2003 we bettered our own
record by purchasing the ULCC Sea Giant which was 555,000 dwt
and 74,000 long tons. Apart from these, of course was our highest
value deal which was the floating storage and offloading vessel
FSO Maxus Widuri, 323,000 dwt, which was about US$29m.
In the course of doing achieving all this, we have steadily
maintained about 15-20% of the worldwide market share.
LL: What is Wiranas future how does this align with the
future of the industry?
We, as the oldest and most experienced cash buyer, are
committed to serving the ship recycling Iindustry. Wirana,
as you are aware, is a strong proponent of green recycling.
We help sellers, whenever they request us, to recycle their
ships in an environmentally friendly way. Some of the yards
to whom we sell are approved by even the most stringent
of owners pursuing green recycling including Stolt Nielsen,
MOL, Odjfell and many others and this is true not only for
yards in China but in India too as well. We also try to increase
awareness by sponsoring and speaking at events and
conferences.
LL: When we last met, you had an interesting philosophy
of work, company growth and creative endeavour Id like to
talk a little about that.
Well, I am glad you still remember our conversation about
that. What I had mentioned is that the name W I R A N A
is an acronym and it stands for - Work Is Religion, Aspire N
Achieve. The thought process here has its roots in Indian
spiritual philosophy, which places a lot of importance on
personal endeavour and when it is coupled with Gods grace,
there is no limit to what one can achieve. n
China has almost unlimited ship recycling capacity
www.lloydslist.com
Top beneficial owners' countries of residence

in Gross Tonnage
Number of vessels
Number of vessels
3,324
5,475
Number of vessels
6,051
Number of vessels
2,774
4,421
143m
154m
Number of vessels
Number of vessels
2,053
Number of vessels
4,215
Number of vessels
3,414
94m
99m
Number of vessels
1,119
Number of vessels
Hong Kong
SouthKorea
31m
US
33m
China
36m
Germany
43m
Greece
46m
58m
Japan
6,630
Norway
Singapore
Taiwan
World fleet
Bulk
Tanker
Container
Other
General Cargo
No. vessels: 10,377

397m GT
No. vessels: 13,056

322m GT
No. vessels: 5,036

189m GT
No. vessels: 39,554

62m GT
No. vessels: 15,434

54m GT
Gas Tanker
Ro-ro
Passenger
Reefer
No. vessels: 1,716

53m GT
No. vessels: 2,619

51m GT
No. vessels: 4,525

34m GT
No. vessels: 1,193

5m GT
Source: Lloyds List Intelligence
29/01/2014 14:05
environment
Five must-haves for the future

We must move together towards sustainability
By Dr Grahaeme Henderson, chief executive, Shell Shipping
ISInG prosperity in emerging markets and 2bn more

consumers by 2050 will escalate global demand for
shipped goods and energy supplies.
Shipping is the cleanest, most reliable and costeffective way to satisfy this demand. The shipping industry
has an outstanding opportunity and responsibility to become
safer, more sustainable and more efficient in the challenging
and volatile times that lie ahead. The shipping industry can,
and must, drive improvement for its customers, employees,
partners and stakeholders with five must-haves for a
successful future:
safety: This is the number one

priority for every person in every part
of the industry to ensure there is no
harm to people or the environment.
despite recent improvements across
the industry, there are still too many
incidents.
is not a competitive area and performance must be improved.
It requires leadership and people working together to ensure
safe operations, every minute of every day. At Shell, we
are working with our many partners to drive improvements
in safety through leadership and training in personal and
process safety, a focus on high-risk operations and learning
from incidents.
environmenT
Dangerous cargoes require leadership and cooperation to

ensure safety
Environment: Increased regulations are a positive step

forward, but it is even more important for the shipping
industry to develop a mindset beyond compliance and
demonstrate leadership on environmental issues. Shell is
helping to push the frontiers of LnG powered vessels, and
we are hopeful this will soon become more widespread with
LnG fuelling all types of ships from crude carriers to barges,
lowering emissions of nOx, SOx, CO2, and particulates and
reducing noise levels.
saFeTy
TecHnology
Safety: This is the number one priority for every person

in every part of the industry to ensure there is no harm to
people or the environment. Despite recent improvements
across the industry, there are still too many incidents. Safety
Technology: Whether it is new engines, fuel-efficient operations,

smarter scheduling, novel designs or commercial models, the
maritime industry must challenge traditional practices and extend
the boundaries of innovation to drive improvement. Shells
136
www.lloydslist.com
29/01/2014 14:05
environment
Shells Prelude floating LNG project earned the prestigious Lloyds List Global Award for Technological Innovation in 2012 and 2013
world-first Prelude Floating LnG project and its pioneering LnG

powered barge, Greenstream, earned the prestigious Lloyds
List Global Award for Technological Innovation in 2012 and 2013.
Companies across maritime and shipping supply chains must
champion innovation and more integrated approaches to sustain
performance and long-term growth.
eFFiciency
Efficiency: The shipping industry is at the start of a journey to
simplify, standardise and speed up end-to-end operations. The
airline business provides a compelling example of how safe and
efficient operations can be delivered consistently across a highly
competitive and large, fast-moving global industry, underpinned
by common practices and operational standards. At the core of
our own efficiency programme in Shell has been forensic analysis
of the 100+ steps that make up each ship journey. The resulting
efficiency improvements have saved more than 90 ship days in
this year alone and we are pursuing industry-wide opportunities
through collaborative working with port and terminal authorities,
shipping companies, suppliers and regulators globally.
people
People: The shipping industrys success has been built on
great technical, operational and commercial talent, both on
and offshore. Looking ahead, the industry will need even
more innovators and diligent, diverse delivery teams to grasp
opportunities as new paradigms emerge. Strong investment
www.lloydslist.com
i am immensely proud to be part of the

global shipping community and know
that we can make a significant positive
impact to the lives of so many people
around the world, caring for the safety
of our own people and the oceans in
which we work.
in training of industry staff at all levels will be crucial to
underpin growth and create more centres of maritime
excellence around the world.
I am immensely proud to be part of the global shipping
community and know that we can make a significant
positive impact to the lives of so many people around the
world, caring for the safety of our own people and the
oceans in which we work.
Lets work together towards a future for the shipping
industry that is safer, smarter and more sustainable. Lets
earn admiration from other global industries for shippings
advanced technologies and seamless, integrated supply
chain. Lets demonstrate to current and future generations
that we are true custodians of the worlds oceans. n
137
29/01/2014 14:05
FUTURE PROOF SHIPPING

Commercial vessels have advanced significantly over the last 300 years, despite
those who argue the industrys conservative image. Steam superseded sail, and
then diesel superseded steam. Iron was developed as a more robust material
than wood, before steel became the material of choice. Cost and eciency had
substantial roles to play in these developments.
Regulations, social responsibility, often called sustainability, and costs will see
the introduction of new fuel types, the marinisation of land based technologies
and more demand for oversight.
Those drivers are still relevant in the 21st century. While the industry is in the
midst of the age of diesel, there is now a new drive that is influencing shipping.
The ship of the future will be watched more intently, operated more eciently
and will embrace dierent solutions, some of which may work, some of which
may not. One key element will be to have vessels with the ability to be converted
or retrofitted to meet regulatory or commercial challenges.
The ship of the future is not going to be a revolution in design. Dierent

shipping sectors will embrace dierent developments, dierent technologies
and see dierent technologies.
Lloyds List looked at what these vessels may possibly include and developed its
own idea for how to modify a modern vessel in service today to make it future
proof, capable of meeting what the future will oer.
CONDITION MONITORING
SOFTWARE AND SERVICES
VOYAGE OPTIMISATION AND WEATHER ROUTING
Planning the journey has never been easier with modern technology.
Companies will now offer continual guidance to make sure the best route from
A to B is made.
With crews over worked, having remote

services is proving a cost effective way
of watching over the shipowners asset.
EMISSIONS MONITORING
KITES & SAILS
Measuring it is the first step in curbing it. The green

lobby groups see this as a vital tool in cutting CO2. For
shipowners it is also the first step in keeping their
operating costs down.
These are the visual darlings of the eco-crowd, but

they do make a difference. The problem will be
whether they are too complicated to use.
SPOILERS
BATTERY FUEL CELLS

AND SOLAR PANELS
Maybe covering the front of the

accommodation with a canvas tarpaulin is not
suitable today, but tests on stream lining the
superstructure are showing promising results.
The ability to use alternative

power to cover excessive
power demands will see
engines able to run for longer
at optimal loads. A good
source of cold ironing as well.
FLETTNER ROTORS
A proven technology that looks like

a 1950s sci-fi dream come true. But
the magnus effect could make the
difference in the future.
HULL BLASTING AND COATING
HULL APPENDAGES
It is as much the speed that the hull coating

degrades as the application in the drydock.
Hull coating selection and then maintenance
are seen as two of the most important ways
of getting as much out of the ship as
possible. Rough bottoms means more power
for the same speed.
The ultimate bit of pimping for your ship.

These underwater devices are becoming
more popular as owners begin to hear of the
results on competitors ships.
Mewis duct
RUDDER AND AUTOPILOT IMPROVEMENTS

Steady handling makes for a better ship. Owners see the
benefits of taking corners more gently.
THE ENGINE ROOM

TURBOCHARGER
Improvements, or in the
speedy containerships
the ability to switch them
off at low loads, is vital
to improving fuel
consumption.
The right angle for the right

speed gives significant
improvements. The cost of the
software is hardly prohibitive.
CREW AWARENESS
Knowledge, experience and
awareness ensure modern
technical tonnage works
like clockwork.
WASTE HEAT
RECOVERY
Hot exhaust gas is the
same as throwing money
away. Capturing the heat
in a separate system and
using it to generate extra
power is a clear bonus.
ENGINE TUNING
A finely tuned engine is any boy racers
dream, just as the optimally tuned engine
for a ships speed is a dream for the
accountant watching the fuel bill.
TRIM OPTIMISATION
LUBE OIL ANALYSIS

AND DELIVERY
Poor application may lead to poor
engine performance, but applying
too much can be just as costly.
Automated systems are available
to ensure optimised application.
AIR LUBRICATION
Pushing air under the hull is beginning to

make sense as a way of reducing friction
and making the ship hit those speeds
with less engine power.
29/01/2014 14:05
29/01/2014 14:05
Specialist in repair
and conversion
As the premier ship repairer and market leader
in FPSO, FSO and FSRU Conversions, we have
come to be known for our flexibility, quality,
innovation, safety excellence and commitment
to customers.
Keppel Shipyard Limited (A member of Keppel Offshore & Marine Limited)

51 Pioneer Sector 1 Singapore 628437 Tel: (65) 68614141 Fax: (65) 68617767 Email: ks@keppelshipyard.com www.keppelshipyard.com
29/01/2014 14:05
ShipyardS
conTacT
Keppel Shipyard Ltd
(Tuas Yard Head office) | 51 Pioneer Sector 1 Singapore 628437
Tel : 65 6861 4141 | Fax : 65 6861 7767 | Email : ks@keppelshipyard.com
www.keppelshipyard.com
eppel Shipyard, a subsidiary of Keppel Offshore &

Marine, is the global industrys trusted partner for the
repair, conversion and upgrading of a diverse range
of vessels. We dock an average of 400 vessels of various
sizes annually. With over 140 years of experience, Keppel
has earned a strong reputation as the preferred partner for
complex projects with safe and quick turnaround.
Keppel has successfully completed the largest number of FPSO,
FSO and FSRU conversion projects and turret fabrications in the
world. As of December 2013, Keppel Shipyard completed 110
FPSO/FSU/FSRU conversion/upgrading and 110 major specialised
upgrading projects, in which we had carried out the jumboisation
and lengthening of vessels, livestock carrier conversions, drillship
integration/completion, and life extension projects.
In Singapore, Keppel operates three facilities Tuas, Benoi &
Gul yards. With a total capacity of eight docks located across our
three yards in Singapore, Keppel is able to accommodate up to a
total of 1,450,000 deadweight tonnage with high flexibility in dock
arrangements to meet shipowners and shipmanagers needs.
We are also able to leverage the synergies of Keppel Offshore &
Marines global network of 20 yards in the Asia Pacific, Gulf of
Mexico, Brazil, the Caspian Sea, the Middle East and the north
Sea regions for the execution of our projects near customers,
and near markets.
As a leader in the industry, Keppel Shipyard is committed to

providing our customers with value-added services through
continual productivity, process and quality improvements as
well as environmentally-friendly and safe practices. n
1968 Dockyards Department of the Port of Singapore Authority is

corporatized and named Keppel Shipyard
1971 Keppel Shipyard acquires a 39% stake in Far East

Levingston Shipbuilding Ltd (FELS) and enters the rig
building business
1975 First overseas venture: Keppel Philippines Shipyard is set

up in Batangas
1976 Keppel Shipyard acquires Singmarine Shipyard

1980 Keppel Shipyard is listed on Singapore Stock Exchange
1986 Keppel Shipyard is renamed Keppel Corporation, with
Keppel Shipyard as a major operating division
1990 Keppel Shipyard repairs one of its first LnG carriers

1995 Second shipyard in the Philippines is set up
1997 FELS renamed Keppel FELS
2002 Keppel Offshore & Marine (Keppel O&M) is officially
launched following the integration of Keppel FELS and
Keppel Shipyard
2003 Marine Technology Development is set up

2007 Keppel O&M establishes Keppel Offshore & Marine
Technology Centre (KOMtech)
2011 Keppel Shipyard strengthens topside capabilities with a

stake in Dyna-Mac
2012 Keppel Shipyard completes 100th FPSO/FSO/FSRU

conversion/upgrading project
www.lloydslist.com
141
29/01/2014 14:05
ShipyardS
synergy and ambition

With more than 140 years of history under its belt, Keppel Shipyard has firmly established itself as a
world leader in shiprepair, conversion and upgrades
By Tom Leander, editor-in-chief, Lloyds List Asia
Shipyard. In 1968, the Dockyards Department of the Port

of Singapore Authority was corporatised and the entity
was named Keppel Shipyard. In 1986, Keppel Shipyard was
renamed Keppel Corporation, and Keppel Shipyard became a
major operating division under Keppel Corporation.
Today, Keppel O&M is made up of three resourceful,
innovative and high-growth offshore and maritime industrial
players Keppel FELS, Keppel Shipyard and Keppel
Singmarine a group that has proven to be greater than
the sum of its parts. The synergies that Keppel Shipyard
now draws upon have allowed the shipyard to leverage
the resources of its sister companies and assume global
leadership in conversion of floating production storage and
offloading vessels; floating storage and offloading vessels;
floating storage and regasification vessels; and now to
venture further up the liquefied natural gas value chain to
floating LnG conversions. It is also the trusted industry name
for the repair and upgrading of a diverse range of vessels.
Like its compatriot companies in Keppel O&M, Keppel
Shipyard has not let market leadership dull its ambition to
exceed its already impressive record. As the world enters
a new phase in the development of offshore energy and
extraction and transportation of natural gas, Keppel Shipyards
ambition to lead in this market has only grown stronger.
Keppel Offshore & Marine - comprising Keppel FELS, Keppel

Shipyard and Keppel Singmarine - harnesses the synergy of its
20 yards worldwide to provide a comprehensive suite of offshore
and marine solutions
a naTional HeriTage in sHiprepair

and diversiFicaTion
he Keppel Shipyard story, like the story of Singapore

itself, is one of pluck, opportunity and vision, all
related to Singapores good fortune in being located
strategically at a global maritime traffic crossroad.
More importantly, the story reflects Singapores grit and
determination to make the most of this advantage, and to
have an outsize impact on global commerce.
Keppel Shipyard is the oldest of the companies in the
group today known as Keppel Offshore & Marine (Keppel
O&M). Perhaps less well known is that Keppel Corporation,
a major conglomerate at the centre of Singapores economy,
and Keppel O&Ms parent, used to be known as Keppel
142
While Keppel O&M has been formed for only 11 years, the
legacy of Keppel Shipyard, nevertheless, is rich. The name
Keppel finds its origins with Henry Keppel (1809-1904),
master of Meander, which first called to Singapore in 1848.
Capt Keppel is credited as the first individual to understand
the full potential of Singapores natural harbour at Tanjong
Pagar.
I was astonished to find deep water close to shore,
with a safe passage through for ships larger than
Meander, Capt Keppel wrote to the British Admiralty.
He advised that the Admiralty develop the harbour as a
port, a bit of wisdom that was roundly ignored until the
Suez Canal was completed in 1869 and shipping traffic
to the East Asia increased thereafter. Capt Keppel, later
promoted to admiral, was still going strong at 92 years old
when he visited Singapore in 1900. The governor honoured
www.lloydslist.com
29/01/2014 14:05
ShipyardS
his visit by renaming Singapores New Harbour to Keppel

Harbour.
By 1960, Singapores harbour and port still called locally
Keppel Harbour had become the fourth busiest port in the
world (it was second after Shanghai in 2013) and home to
several key dockyards. In 1964, when the Port of Singapore
Authority (PSA) was established, a dockyard committee was
formed by the PSA to guide and grow shiprepair activities.
This later led to the corporatisation of the Dockyard
Department, which was the shiprepair arm of the PSA, and its
renaming to Keppel Shipyard in 1968.
the expansion of Keppels maritime

offerings were ripe for integration, with
three large enterprises in related fields
operating independently from one
another.
An aerial view of the yard at Keppel Harbour in the early 1990s,

shortly before Keppel Shipyard moved to new yard locations in
the southwestern coast of Singapore
By the end of the 1990s, Keppel Shipyard, which became

an operating business unit under Keppel Corporation,
had undergone a remarkable journey, but the expansion
of Keppels maritime offerings were ripe for integration,
with three large enterprises in related fields operating
independently from one another.
Choo Chiau Beng, former chief executive officer of
Keppel Corporation and former Chairman of Keppel O&M,
commented the state of Keppels maritime businesses at the
time: To become a truly global company, we would have to
forge a unified team. There would be no more in-fighting and
competing against each other within the group. We would be
focused on our customers and the marketplace.
Enter Keppel O&M, and the power of synergy. The
integration of Keppel FELS, Keppel Shipyard and Keppel
Singmarine in 2002 into Keppel O&M proved to be a move
that fortified all three businesses, not least Keppel Shipyard,
and set each on a remarkable growth path.
We decided to become the preferred solutions provider
in the businesses we choose to be in, said Choo. We
decided to create a unified team and build global leadership
in three areas rigbuilding, shiprepair, and conversions,
and the construction of specialised vessels.
The move brought together Keppel FELS, Keppel Shipyard
and Keppel Singmarine under a single umbrella. It was
determined then that Keppel FELS would concentrate on the
design and construction of offshore rigs; Keppel Shipyard
would look into ship conversion, upgrading and repair; and
Keppel Singmarine would focus on specialised shipbuilding.
timed. FPSOs today represent the largest segment of floating

production vessels operating today and account for about
80% of capital expenditure on floating production vessels
due to be delivered through 2017, according to DouglasWestwood, the research firm.
FPSOs are selected for use in deepwater above other
practical options because they are a trusted technology
and a known entity among operators, noted classification
society DNV-GL, in recent commentary on floating production
vessels. This market is likely to continue to expand and
FPSOs are expected to increase in size and complexity. The
golden triangle regions the Gulf of Mexico, West Africa
and Brazil are particularly driving this.
Power of integration
Wholly owned by the Singapore government, Keppel

Shipyard became a testament to the governments ambition.
Keppels first chairman, Hon Sui Sen, declared that the
shipyard would increase its annual revenues to S$50m ($39m)
from S$35m in five years. In fact, Keppel Shipyard bested that
target in only three years, reaching S$60m in 1971.
From 1973, Keppel Shipyard started to look to expanding
and diversifying. With the purchase of a 40% in oil rig
builder Far East Levingston Shipbuilding (FELS) in 1971,
Keppel Shipyard embarked on a move that would eventually
lead to Keppel FELS ascendency as one of the worlds top
rig builders. In 1976, Keppel Shipyard bought Singmarine
Shipyard and merged it with another Keppel unit, Singapore
Slipway. Keppel Singmarine today is a world leader in
building ice-class, offshore support and specialised vessels.
International expansion began in 1975, when Keppel
Shipyard started operations at Keppel Philippines Shipyard
at Batangas. In 1980, Keppel Shipyard was listed on the
Stock Exchange of Singapore and then eventually renamed
Keppel Corporation in 1986.
In the new decade, Keppel Shipyard also built on its
original and thriving shiprepair business to foray into
conversions when it took on the job of converting the worlds
first leased FPSO unit in 1981. The move proved to be well
www.lloydslist.com
143
29/01/2014 18:53
ShipyardS
At the tenth anniversary of formation of Keppel O&M,

former chief executive officer Tong Chong Heong could
reflect: It has been shown that this is probably the best
decision we have made in a long time. Answerable to the
same management, the three companies have been working
together to reap synergies. The creation of Keppel O&M
also brought clearer direction and purpose to our overseas
yards.
drawing on more than 140 years of

experience, Keppel has earned its
strong reputation as the preferred
partner for complex projects with safe
and quick turnaround.
Those overseas operations today include 20 yards in

regions including Asia Pacific, the Gulf of Mexico, Brazil,
the Caspian Sea, the Middle East and the north Sea. With
a presence in almost all major oil producing regions in
the world today, Keppel O&Ms strategy of being near
Market, near Customer allows its customers to enjoy the
convenience of working with local teams, and yet still benefit
from the experiences of its global network.
reaping synergies, Keppel sHipyard

eyes THe FuTure
Like its two sister companies, Keppel Shipyard is building on
the solid foundation of the Keppel O&M group to maintain a
relentless focus on quality and to take calculated steps into
new markets.
Drawing on more than 140 years of experience, Keppel
has earned its strong reputation as the preferred partner
for complex projects with safe and quick turnaround.
Today, Keppel Shipyard is the market leader in FPSO,
FSO and FSRU conversions, as well as turret and mooring
systems and topside modules fabrication. The company
has successfully completed the most numbers of FPSO,
FSO and FSRU conversion projects and turret fabrication
in the world. Supported by established technology
centres and dedicated facilities, the yard provides a full
suite of services which includes engineering, fabrication
and integration for turrets and mooring systems and
topside modules.
With strong operational and engineering capabilities and
a steadfast commitment to safety excellence and quality
services, Keppel Shipyard is also the global industrys
144
Keppel Shipyard has an extensive track record in fabricating and

integrating turret and mooring systems
trusted partner for the repair and upgrading of a diverse
range of vessels. These upgrading projects draw on Keppel
Shipyards extensive experience in jumboisation a
technique of shipbuilding consisting of enlarging a ship
by adding an entire section of it and lengthening of
vessels, drillship integration/completion, and life extension
projects.
Approximately 400 vessels call on Keppel Shipyard for
repair and maintenance work annually. Keppel Shipyards
three yards along the southwestern coast of Singapore at
Tuas, Benoi and Gul Road maintain a total daily workforce
of 15,000-17,000 direct and subcontracted workers for its
ship repairs and conversion projects. With a total capacity
of eight docks located across its three yards in Singapore,
Keppel Shipyard is able to accommodate up to a total of
1.45m dwt.
Recently, Keppel Shipyard added to its docking capacity
after widening and lengthening one of its docks in the
Tuas yard to achieve greater flexibility in accommodating
larger sized vessels. The newly expanded Raffles Dock, now
measuring at 400 m by 64 m, allows Keppel Shipyard to
accommodate vessels such as the new generation of ultra-large
containerships. Mette Maersk, a containership measuring 366m
www.lloydslist.com
29/01/2014 14:05
ShipyardS
in length and owned by AP Moller-Maersk, was the first vessel to

benefit from the expanded dock. Currently, there are few repair
yards with drydocks capable of taking such large vessels.
With the expansion of one of its docks in the Tuas yard, Keppel
Shipyard can now accommodate vessels such as the new
generation of ultra-large containerships which measure 400
metres in length and have a capacity of 18,000 teu or more
Beyond its Singapore yards, Keppel Shipyard is able
to leverage synergies of Keppel O&Ms global network of
yard facilities, resources and capabilities in places such as
Qatar, the Philippines, China, the netherlands and Caspian
in the execution of its projects. These synergies have
allowed Keppel Shipyard to provide value-added solutions
of flexibility in meeting customers requirements for their
docking schedule in various geographical locations.
For instance Keppel Shipyard has worked together with
its sister yard in Brazil BrasFELS to contribute substantially,
directly and indirectly, to the expansion of Petrobras FPSO
fleet.
Three contracts announced at year end

2013 underscore Keppel shipyards ability
to harness long-term partnerships.
The modification and upgrading of NGoma FPSO, which

include intensive turret and topside module works, is among the
ongoing projects that Keppel Shipyard is undertaking for longtime partner SBM Offshore
One of the contracts is an FPSO conversion job from
Armada C7 Pte Ltd., a subsidiary of Malaysias Bumi Armada
Berhad (Bumi Armada) and Shapoorji Pallonji Group. Bumi
Armada is a Malaysia-based international offshore oil-field
services provider with presence in over 18 countries spread
across five continents. This will be Bumi Armadas 11th
collaboration with the shipyard company.
Another long-term customer Singapores EZRA Holdings,
through its subsidiary EMAS AMC, also contracted with Keppel
in the final months of 2013. Keppel Shipyard will undertake
the fabrication of an external turret for an FSO unit.
THe poWer oF parTnersHip

Keppel Shipyard has a strong emphasis on partnership with
many of its projects coming from repeat customers. One
such long-time partner is SBM Offshore nV, which owns and
operates the worlds largest fleet of FPSOs. Keppel Shipyard
has delivered 20 FPSO/FSO/turret fabrication projects to
SBM Offshore since 2000.
Speaking of the collaboration in 2012, Bruno Chabas, chief
executive officer of SBM offshore, said: Long-term business
partnerships are key to our performance, our ability to deliver
and our ambition in furthering our lead in the FPSO market. We
value our proven partnership with Keppel Shipyard.
Such collaboration is hardly untypical. Three contracts
announced at year end 2013 underscore Keppel Shipyards
ability to harness long-term partnerships and the
companys contribution to exploration and production at key
points around the globe.
www.lloydslist.com
The FPSO Armada Claire (right vessel) project is the tenth major
collaboration between Keppel Shipyard and long-term partner
Bumi Armada
145
29/01/2014 14:05
ShipyardS
With good working relationship comes a confidence that

helps to deepen Keppel Shipyards collaboration with its
partners even further. One case in point was when MOL
Tankship Management (Asia) entrusted Keppel Shipyard with
a landmark ballast water treatment system retrofit project in
March 2013. This is the first BWTS retrofit for an existing very
large crude carrier owned by a Japanese shipowner as well as
the first such installation to be undertaken in Singapore.
Chor How Jat, managing director of Keppel Shipyard,
says: We have serviced more than 200 vessels for the MOL
Group since early 2000, when our companies signed a longterm fleet agreement. We are glad to be entrusted with this
retrofit project, which bears testament of MOLs trust and
confidence in our capabilities. We believe that ship owners
even as Keppel shipyard builds on its

links with its longstanding partners,
the company also works hard at
attracting and retaining new customers
with value-added services.
and operators will benefit from having experienced shipyards

undertake comprehensive BWTS retrofit services.
Even as Keppel Shipyard builds on its links with its
longstanding partners, the company also works hard at
attracting and retaining new customers with value-added
services.
Michael Chia, managing director (marine and
technology) of Keppel O&M, shares on going the extra mile
for clients. We continuously work on being a choice yard
for new and repeat customers with a customer-focused
approach.
For instance, when we recognise that smaller and
newer FPSO owners and operators require more project
management and engineering support for their projects,
our operations team put in more resources to enhance our
topside and module engineering and fabrication services.
We also maintain a symbiotic relationship with our
customers. When there is reduced activity and revenues in
the shipping sector, as was the case in 2012 and 2013, we do
our best to help with lower costs and lower margins.
commiTmenT To saFeTy and THe environmenT

A cornerstone to Keppel Shipyards drive for quality has been
its commitment to health, safety and environment, or HSE, in
line with cross-yard initiatives at Keppel O&M. The shipyards
safety programme is supported at all levels by its senior
146
All smiles for another successful collaboration between Keppel

Shipyard and Bumi Armada at the sail away ceremony for the
FPSO Armada Sterling on 27 October 2012: (L-R) Chor How Jat,
managing director of Keppel Shipyard, Michael Chia, managing
director (marine & technology) of Keppel O&M, Hassan Basma,
executive director and chief executive of Bumi Armada, and Tong
Chong Heong, former chief executive of Keppel O&M
management, direct workers, vendors, subcontractors, as
well as government agencies and other important players in
the industry. Active engagement of clients is also key to the
success of Keppel Shipyards safety drive and innovation.
The shipyard works closely with oil companies such as
Shell and ExxonMobil, and regular customers such as SBM
Offshore, Bumi Armada and Apache among many others to
enhance the safety culture across its yards.
The efforts to maintain a sustained and calibrated
commitment through a five-year plan is showing results.
In 2013, Keppel Shipyards overall accident frequency rate
improved to 0.0 accidents per million man-hours worked
from 0.06 in 2012. As a testament to its continued drive
and performance in safety, the company also received as a
number of awards in 2013. Keppel Shipyard was conferred
eight awards by the Workplace Safety & Health Council
and Singapores Ministry of Manpower, and the Safety
Award by Seatrade Asia Awards. At both Lloyds List Asia
and Lloyds List Global Awards, Keppel Shipyard was given
the Safety Award in recognition of its excellence in this
regard.
Keppel Shipyard also has three ongoing programmes
Safety Plus, Quality Plus and Productivity Plus which
have produced encouraging results. In one example, since
Keppel Shipyard started operation of its semi-automated
pipe fabrication workshop in 2009, the pipe workshop
has brought about an improvement by 51% in its average
productivity index for pipe fabrication. Such enhancement
to productive efficiency not only brings about time
savings, but also adds to cost efficiencies for Keppel
Shipyards clients.
www.lloydslist.com
29/01/2014 14:05
SHIPYARDS
On the environmental side, Keppel Shipyard has also

embarked on various energy saving initiatives to cut cost
and reduce its carbon footprint. Some of these initiatives
include converting to variable speed drive in the tower
crane travelling system, using energy saving lights in the
tower crane embarkation tower, using metal halide tubes
for vessel tank lightings and other measures.
On the environmental side, Keppel

Shipyard has also embarked on various
energy saving initiatives to cut cost
and reduce its carbon footprint.
Front-End Engineering and Design study, represents Keppels

Negotiations on the contracts, which are still ongoing at
the time of print of this article, commenced following the
conclusion of the FEED study in end August 2013 that was
and work scope.
Golar is one of the worlds largest independent owners and
operators of LNG carriers with over 30 years of experience. It
had turned to Keppel Shipyard in 2006 to develop the worlds
Michael Chia (centre), managing director (marine & technology)
of Keppel O&M receiving the Lloyds List Global Award for safety
on behalf of Keppel Shipyard
expertise with Moss Rosenberg type LNG vessels. The move

to FLNG is a component of Golars global strategy to service a
wider band of the natural gas value chain.
We are progressing plans to grow our business further
upstream via FLNG, according to Golars mission statement
on its website. Our strategic objective is to become an
integrated midstream player in the LNG industry.
Developing FLNG conversion capability is a rich and
promising area for Keppel Shipyard. There are currently
no FLNG vessels deployed, but 10 projects are underway.
investment decision to deploy an FLNG project at the Prelude
oil and gas giant, is now undertaking a study and plans to
East Malaysia.
Every year, Keppel Shipyard workers go through safety courses

at the Keppel Safety Training Centre to learn about safe
operations of equipment and the high impact risk activities
PIONEERING FLNG CONVERSION

With a drive for quality comes higher performance. Keppel
Shipyards venture into FLNG conversions is a natural
progression stemming from its leadership in FPSO, FSO and
especially FSRU conversions. John Fredriksen-controlled
Golar LNG signed a term sheet agreement with Keppel
Shipyard in late 2012 for the conversion of an LNG carrier
into an FLNG vessel, with an option to convert two additional
vessels. This agreement with Golar, which started with a
www.lloydslist.com
THE TRADITION CONTINUES

dockyard in the 19th century to the cutting edge of ship
conversion in the 21st century has been an exercise in
resilience and invention. Like the nation it calls home,
Keppel Shipyard has succeeded on merit and a drive to
now faces the challenge of improving that score. If so, it
has more than a century and a half of experience to draw
on and a company culture that has refreshed its drive
for quality with each decade. What applied when local
management assumed control of Keppel Shipyard in 1972,
applies now. Can do!
147
WORLD LEADER IN SHIPPING LAW
Holman Fenwick Willan is a global law firm with a long history of advising
businesses at every stage of the maritime supply chain. With 14 offices across
11 countries, our specialist lawyers advise on:
n Admiralty and Crisis Response
n Logistics
n Ports and Terminals
n Commodities
n Marine Insurance
n Ship Finance
n Corporate and Finance
n Offshore and Exploration
n Shipbuilding
n Cruise
n Personal Injury
n Shipping Contracts
n Energy, LNG, Oil and Gas
n Piracy, War and Terrorism
n Superyachts
We have extensive crisis management experience and offer a 24hr emergency response service:
+44 (0)20 7709 7702

Download our HFW Maritime Emergency Response App at www.hfw.com/hfw-app
MARITIME
Lawyers for international commerce

So Paulo
London
Paris
Rouen
Brussels
Geneva
ADVERT Lloyd's List - 300 Years of Shipping [A4 1pp] December 2013 v5.indd 1
P148-174_RRISK&INS.indd 148
Piraeus
hfw.com
Dubai
Hong Kong
Shanghai
Singapore
Melbourne
Sydney
Perth
18/12/2013 14:37
29/01/2014 13:40
13 14:37
risk & insurance
29/01/2014 13:40
risk and insurance
contact
Paul Dean, Partner
Holman Fenwick Willan LLP
Friary Court | 65 Crutched Friars | London EC3N 2AE
Tel: +44 (0)20 7264 8000 | Fax: +44 (0)20 7264 8888 | email: paul.dean@hfw.com
www.hfw.com
olman Fenwick Willan (HFW) is a global law firm advising on

all aspects of international commerce. Established in 1883,
the firm has grown to more than 450 lawyers based in 11
countries and provides a global service around the clock.
For more than 130 years, we have advised our clients at all stages
of the business cycle; we provide the expertise to advise on deals
and transactions, the exploitation of minerals and materials, the
creation of projects, the flow and financing of goods and services,
the management of risk, competition and regulatory issues, and
restructuring and insolvency. We are also recognised experts in
cases of disputes, accidents and upheaval.
Our aim is to help our clients achieve their business goals we
see ourselves as commercial advisers, as well as lawyers, and
pride ourselves on our in-depth knowledge and experience in
the industry sectors in which we specialise, including aviation,
construction/engineering/infrastructure, commodities, energy,
financial institutions, insurance/reinsurance, logistics, mining,
ports/terminals, shipping, space, superyachts and travel/
cruise/leisure. We use our transactional, regulatory and dispute
resolution legal expertise as the foundation of the advice we
provide, rather than as the primary focus.
Our offices in South America, Europe, the Middle East and
Asia-Pacific work collaboratively, and we also have extensive
and well-established relationships with many law firms in those
jurisdictions where we do not have offices. As a result of the way
the firm has grown, we believe that we are the right size big
enough to provide the comprehensive service required by our
clients around the world, but flexible enough to adjust to their
changing requirements.
We run our business responsibly, operating to the highest ethical
standards in all our dealings with clients, with each other and with
the wider community. Our corporate responsibility commitments
include supporting a number of charities and charitable
programmes around the world, running community programmes
with schools, colleges and other groups, and offering pro bono
advice to charities and other not-for-profit organisations. n
150
1883
Frank Holman sets up in practice as a solicitor

in the City of London the original roots of HFW.
1905
By now, E.A. Fenwick and W.C. Willan have

joined the partnership, providing the basis for
the firms present name.
1920-1950s
The boom in the value of ships in the 1920s

gives way to a subsequent market collapse.
The firm acts for both owners and underwriters
in a large number of scuttling cases. During
World War II, the firm is engaged on a range of
matters, including significant convoy collisions.
1977-78
The Paris office is opened, the firms first office

outside London, followed by the Hong Kong
office. The firm now has 16 partners.
1991-99
Four more offices are opened, in Singapore,

Piraeus, Rouen and Shanghai.
2006-11
Seven new offices are opened, in Brussels,

Dubai, Melbourne, Sydney, Perth, Geneva and
So Paulo. The firm now has more than 100
partners.
2009
HFW converts to LLP status.
2013
The number of HFW partners exceeds 150, and

total number of lawyers is more than 450.
www.lloydslist.com
29/01/2014 13:40
risk and insurance
Laws of the sea

The shipping industry has become increasingly regulated over the past 300 years
By Felicity Landon, contributing writer, Lloyds List
nternatIonal business has experienced a period of

exceptional turbulence over the last few years: a series
of natural and man-made disasters, huge fluctuations
in commodity prices, stock markets and currencies, and
outbreaks of civil unrest in a number of countries. this ever
changing international landscape presents major challenges
to businesses, including in the shipping sector, where, as
richard Crump, senior partner at Holman Fenwick Willan
says, complex laws and regulations, more risk and greater
environmental concerns are some of the key issues those
conducting marine business are grappling with.
Shipping or not, some themes stretch across industries.
Shipping is no different from any other walk of life in
that environmental impact and political impact are key
themes, says Mr Crump. However, on the regulatory side
and increasingly in the world of compliance, the shipping
industry is facing some big challenges.
among them, he highlights the issues around
requirements of the various sulphur emission control areas
and the eU debate over the standards and recognition
of seafarers licences and training in major crew supply
countries, such as India and the Philippines.
on the pollution and environmental side, the burning
of fuel oil that is low-sulphur, the areas already designated
for low-sulphur fuel and the cost implications for the
industry are very important, he says. there are issues of
competitiveness compared to other parts of the world which
are not so rigorous about it. that is an issue very much on all
sorts of organisations agendas.
the european Unions recommendations regarding non-eU
licensed seafarers on eU-flagged ships are of similar concern,
and could even threaten the vibrancy of some european
flags, many of which have seen a successful revitalisation in
recent years.
a lot of seafarers serving on eU ships come from noneU countries India, the Philippines, etc. and certainly
the eU has been looking at Filipino licences and whether it
will allow or effectively recognise these for the purposes of
crewing ships flagged in eU states, says Mr Crump. that
www.lloydslist.com
Wreck removal costs are going through the roof, says Gosling
will be an interesting issue because many, if not most, eU
countries will have vessels with a Filipino master or crew and
that may lead, depending on the legislation, to a move to flag
away from the eU to other jurisdictions in the Far east, for
example.
If the eU says it doesnt recognise Indian or Filipino
certificates, the owner would have to sack all the crew and
potentially go back to the days of very high cost european
employees the result would likely be flagging out
elsewhere.
Bigger risks
as ships get ever larger, there are increasing concerns about
a number of risks, says James Gosling, partner and head of
admiralty at HFW.
151
29/01/2014 16:50
risk and insurance
The nature of the threat posed by West African pirates tends to be quite different from those posed by Somali pirates
our concern is not only on the cargo side but also
on the passenger ship side. Costa Concordia is certainly
not the biggest and so consider the difficulty and
potential impossibility of salvaging some of these megaships.
With an 18,000 teu containership, there is not physically
a crane that you can float that can reach out and take the
containers off the ship if its on fire or grounded. that might
not seem very important, but what if it was grounded in the
middle of the Suez Canal? that would concentrate minds very
quickly.
In the case of a fire, shipowners and salvage companies
have no way of knowing exactly what is on board a vessel
because of potential mis-description, says Mr Gosling. this,
together with the size difficulties, is a major issue the
salvage industry is scratching its head on how it is going to
deal with it.
Similarly, wreck removal costs are going through the roof.
Where US$10 million used to be the rule of thumb for an
average wreck removal, that quickly rose to US$50 million
and now the rule of thumb is closer to US$100 million, he
says.
the International Group of P&I Clubs have got together
and say this is a major concern for them. the Costa Concordia
is a good example salvage costs are said to be around the
US$1.4bn mark, and I suspect there wont be much change
from US$2bn by the end.
Paul Dean, partner and head of shipping at HFW, adds:
the MSC Napoli casualty off the south coast of england was
not much more than 3,000 teu and it was a major headache.
that puts things into perspective. this trend towards ever
larger ships leads to all sorts of knock-on effects.
152
OffshOre issues
the floating out of Shells new FlnG vessel Prelude from
Samsung Heavy Industries yard in South Korea raises
interesting questions in the offshore sector, says Paul Dean.
the 488m long vessel the largest floating facility ever
built has storage tanks with the capacity of 175 olympic
swimming pools and will be working off australia when
completed.
the big issue is whether she is defined as a ship or not
and the consequences of that question going one way or
the other are significant. If Prelude is a ship, its owners may
be entitled to limit their liability in the case of, for example,
a major pollution incident. the ultimate definition also
has implications for taxation, admiralty/arrest, technical
standards and safety issues.
also on the offshore theme, HFW raises ongoing political
risks. We have seen in the past what happened in Venezuela
in terms of the nationalisation of foreign assets, says
Mr Dean. During his 14-year presidency, Hugo Chavez
nationalised more than 1,000 companies including, in
2010, 11 drilling rigs belonging to the US company Helmerich
& Payne. likewise, argentinas recent nationalisation of oil
company YPF, including seizing Spanish oil giant repsols
assets, will have a long-term economic impact.
Piracy and terrOrism

2014 marks ten years since the implementation of the
International Ship and Port Facility Security code.
ISPS was brought in to deal with the maritime equivalent
threat of 9/11 and it seems to me we still have the possibility
of a dirty bomb in a containership, says Mr Dean. there are
real problems for containership owners in not knowing what
www.lloydslist.com
29/01/2014 16:50
risk and insurance
is in the containers they carry. We regularly see over-stowed

containers and mis-declaration of weights these are
significant risks.
Piracy, meanwhile, continues to be the big one for most
in the industry. Piracy has, of course, particularly manifested
itself in Somalia where ships are held to ransom. and that has
been aped to a certain extent off West africa, and more and
more around the world, says James Gosling.
However, he says, the nature of the threat posed by West
african pirates tends to be quite different from those posed
by Somali pirates. Whereas Somali pirates are interested in
hijacking a vessel, sailing it to a safe haven on the Somali coast
and extorting a ransom in return for the release of the ship, cargo
and crew, pirates in the Gulf of Guinea have no such safe havens.
West african governments have a sufficient law enforcement
deterrent to prevent ships being held in their jurisdictions for
extended periods. West african pirates are therefore concerned
with kidnapping the crew or stealing the cargo as quickly as
possible before it is ultimately located by the authorities.
offshore operators are particularly vulnerable in the region,
says Mr Dean.
a further concern is what might be seen as state-sponsored
piracy.
Mr Gosling raises the example of the two tankers carrying
out a ship-to-ship transfer off the West african coast. they
drifted into the waters of So tom Island in bad weather
and both vessels were seized, the cargo was confiscated, the
owners were fined and both of the masters were sent to jail.
Some could see the episode as amounting almost to
state-sponsored piracy and, with endemic corruption in many
of the West african countries, you can see this sort of incident
becoming a growing problem.
Similarly, there is continuing concern over the
criminalisation of seafarers in many jurisdictions some of
which ought to know better, and others using it as a means for
importing finance, says richard Crump.
In such situations, jurisdictions are using masters in a
similar way to piracy using what is in most cases an officer
making an error of judgment, criminalising it and using the
officer as a political pawn for financial gain.
Meanwhile, HFW continues to advise clients about operating
in US-sanctioned regimes, an issue that is expected to continue.
Whichever administration is in power, I think the US will continue
to use sanctions as a way of enforcing how it thinks the world
should be and the shipowner is, most of the time, the innocent
party that gets caught up in the middle of it, says Mr Crump.
as to when and if they are going to take all the liabilities

outstanding on to their balance sheets, says richard Crump.
nonetheless, in the way shipping always has been, many
people are taking the view that the market is now on the up and
looking busy and we are seeing new forms of finance coming
into the market. that includes, for example, US and UK private
equity, export Credit agencies (eCas), and even shipowners
clubbing together to create their own equity funding.
So how and where ships will be financed in the next five
years will be very interesting to watch. Many traditional banks
have opted out of this market and as we see it, others are
only lending to the bluest of blue chip, so that the risk is
relatively small.
the PenduLum cOntinues tO swing east

the shipping world and its support structure continues to swing
towards the east, and HFW has a strong presence in asia.
We have been present in asia for more than 30 years and
now have six offices across the region. Its an exciting time
and we continue to see significant growth, particularly in the
offshore sector, says richard Crump.
However, despite this move east, one interesting fact
remains constant the use of english law. there is no doubt
that english law continues to be trusted throughout the
maritime world as a sound basis for conducting business,
concludes Mr Crump. n
shiP finance
Ship finance is still shaking up, says HFW.
the financial meltdown of 2008 and the ensuing fall in the
freight markets led to major issues for a number of traditional
ship finance/lending banks and the liquidity of these banks
in terms of further lending is still limited. there are issues
www.lloydslist.com
Shipping is no different from any other walk of life in that

environmental impact and political impact are key themes,
says Crump
153
29/01/2014 16:50
risk and insurance
Bigger ships, bigger risk

are ships too big for shipping?
HE shipping industry is not ready to cope with a

large boxship casualty, and its ability to respond to
a cruiseship like Allure of the Seas grounding is also
questionable.
These opinions are held by the two sectors within shipping
that would have to pick up the pieces in the event of a mega
ship casualty: salvors and insurers. Both the International
Salvage Union and Lloyds Joint Hull Committee have
repeatedly warned the industry that it is ill prepared to cope
with the increasing size of vessels on the high seas.
The ongoing removal of the Costa Concordia wreck has
been the most expensive salvage operation to date and it is
not even finished yet while Rena, the boxship that grounded
off the coast of New Zealand, was a nasty surprise for insurers
and illustrates the great difficulty of handling a containership
casualty in a remote location.
It is one of the three most notorious containership
casualties of recent years all of which involved ships of
relatively modest size by todays standards.
MSC Napoli, which was deliberately beached after it started
to break up in the English Channel in January 2007, had a
nominal capacity of around 4,700 teu.
Rena was even smaller at 3,300 teu. MSC Flaminia, which
was badly damaged by fire and an explosion in the middle of
the Atlantic last year, was a 6,750 teu ship.
Yet all three posed considerable challenges for salvage
companies.
saLvage struggLe
Then there was the 8,100 teu MOL Comfort, which split in
two a few months ago in the Indian Ocean, with each half
subsequently sinking despite the best efforts of salvors.
Another high-profile casualty was the 15,500 teu Emma
Maersk, which was out of action for several weeks earlier
this year after its engineroom was flooded following a
stern thruster failure, while firefighters struggled for days
to extinguish burning containers on the 6,800 teu Maersk
Kampala.
The 10,000 teu Zim Rotterdam had to sail all the way from
the Indian Ocean to London Gateway so unexpectedly
154
as boxships become so much larger,

having tripled in size in terms of nominal
capacity over the past 18 years, so
the problems of how to handle an
emergency response or wreck removal are
mounting.
becoming the inaugural ship for the new UK port after a fire
broke out on a container that soon spread to others.
As boxships become so much larger, having tripled in size
in terms of nominal capacity over the past 18 years, so the
problems of how to handle an emergency response or wreck
removal are mounting. The number of salvage companies that
could attempt a large scale rescue are a very few, and even
they could not take on more than one project at a time.
Thats not to say that companies arent frantically trying to
make some headway in this area but it is difficult for several
reasons. One is the lack of investment; the ISU has appealed
time and again for resources to invest in larger salvage
equipment, arguing that the unpredictable nature of the
salvage business makes it very hard for them to do this alone.
One firm could spend billions of dollars on a new solution
which it believes may be able to cope with mega ships which
then gathers dust for 10 years until it is obsolete.
www.lloydslist.com
29/01/2014 13:40
risk and insurance
insurmountaBLe hurdLes
Their request has not been granted yet by other parts of the
industry but Joint Hull Committee chairman Pete Townsend
has been vociferous in his plight to secure further investment
in the salvage industry as a whole. He has appealed to the
International Group of P&I Clubs to come to the table to
devise a solution where industry supports investment.
Nothing definite has come of this yet either but there is
hope. Mr Townsend has warned that if the shipping industry
is not proactive in finding potential solutions for the vessels it
has chosen to build then when, not if, a mega casualty occurs
it will face the wrath of legislators which could have a crippling
impact on what some consider to be an already over regulated
industry.
Where pockets of investment do exist, progress has been
made but it still comes with a caveat. Svitzer Salvage, part of
the AP Moller-Maersk group which owns Maersk Line, operator
of the worlds first 18,000 teu ships, has developed a crane
that will be enable containers to be offloaded onto an adjacent
ship or barge and has urged the industry to invest in this
system.
However, insurers are sceptical over whether this is the
right horse to back as it will only be able to operate on vessels
that have not listed.
A solution which satisfies all parties sufficiently to prompt
investment remains elusive and therefore panic over what
will happen in the event of a casualty of this
magnitude still hovers menacingly over the
industry.
Is it the case that ships have simply gotten
too big for shipping and the hurdles it needs to
overcome are insurmountable?
Arguments over scale were also made when the industry

saw the huge increase in ship sizes many questioned
whether a VLCC could be stopped in emergency.
There was concern over whether it was safe to operate
these monster ships with so little water under the keel and in
a similar vein to todays arguments, people were anxious over
how the salvage industry could cope.
Arguments over the transition of wood to iron in the first
half of the 19th century were similarly fierce and this prompted
a shipbuilding move from the Thames (where the big ships
were built) to the northern rivers of the UK close to where iron
and steel industries were being developed.
Iron and steel were the keys to bigger ships and this was
the time when ship sizes, as a consequence started to rise
dramatically, as did their costs.
The assertion being made here is that at various points in
its illustrious history, shipping has faced obstacles that also
seemed insurmountable, and for some they were, but the
industry adapted and those that had the courage to weather
the storm often came out stronger. The solution for how the
industry needs to adapt to manage bigger ships may not
immediately be clear but it will come to pass and shipping will
move onto the next chapter in its evolution. n
d
e arme
Regulatfast, say
guards ners
shipow
4
Page
KERS,
TAN
BALTIC
US SIX
PREVIO
S SIX MONTHS
TOP 50 INDEX, PREVIOU
MONTH
953.84
1,500
1,200
900
1,000
800
600
Dirty 805
y 17th,
17-Jan-11
12
16/01/20
300
ange
ic Exch
rce: Balt
200
600
Clean 691
400
Sou 2012
ay January 18th,
60,592 | Wednesd
No.
7/2011
lloydslist.com0 |18/0
e since 1734
Leading maritime commerc
18-Jul-11
Source: Lloyds List
analysis
ncordia
PREVIOUS NEAR MISS
of previous routes near
master CONCORDIAS
Costa Co
Costa Crocieres account
data calls into question
i
mes on COSTA
ldive:
us
ou
s ccl
losEx
a
i
d
r
o
a
0
st
c
Co
$8 0m
on
Costa C ndon marketConcordia
cost Lo
in previous
close call
Perhaps not, it is important to remember that this

is not the first time shipping has been at this sort of
crossroads.
The sail to steam debate which took place over a
very long period of 50 years from the 1850s onwards,
was a crisis that had to be faced in every shipowning
company.
It was hugely difficult for the industry to move from
a point the certainty of how shipping had operated for
thousands of years, to the total uncertainty of ships at
three times the shipbuilding price.
This was compounded by the strategic uncertainties
about coal its price and its availability and the unknown
rewards which might, or might not, be delivered in every
case.
Thousands of owners failed to have the courage to
make the leap and disappeared fewer still had the
courage to make the considerable investment and grasp the
opportunities.
When will the

courts act to
restrain ship sales?
Page 7
Weighing
up the
positives
Page 6
1,200
y Januar
Tuesda
591 |
4
| No. 60, rce since 173
me
ist.com
lloydsl
me com
g mariti
Leadin
saiL to steam
LRIT
rest inise
Low inte
pard ntres
ce
coulddjeo
What cause
of data
futugre
Vale Beijin
7
to crack?
Page
Page 4
One d
hundreon
years
6
Page
Luig List Intelligence

ces bla cutive PierLloyds
of Giglio
f exe
unding
Costa pla
groIsland
ise chie
g
for the
2012
resultin
Costa Cru the blame
and the ter,
2012
said
Voyage on January 13th,
Foschi ta Concordia
s mas
(Day of grounding)
g
of the Cos lies with the ship
2011
s
e not bein
.2
Voyage on August 14th,
fatalitie
evidenc y................
formal
despite to the compan
le
14th,
availab
A voyage on August
k theorycauses of
2011 travelled within
roc
d
the
230m of the shore line
Uncharte
ounts of
ualty
ing acc
hip cas
cruises operator
Conflict
Italian
Fridays rged today, with r and the
erro
location
an
have eme ing human
Approximate incident
struck
...2
Costa blam sting that he
...............
insi
travelled
...........
master
The same voyage also
ted rock
ll a very similar path to the
rtfa
unchar
along
0m sho
13th voyage
faces $9loss of Costa fiscal January
2
the
Carnival
in the 201
l expects
CORDIA
Carniva to cost $90m capsized off
CON
ia
TA
the
at
hip
ws
COS
ming
Concord r the cruises
ay, clai
ENTS OFnce AIS data shose ship
2
year, afte t coast on Frid ...............
crui
T MOVEM
llige
wes
THE LASLloyds List Inte of the ill-fated
..........
Italys
e
path
lives. .....
Exclusiv
least six
ll see
loss wi
en
Record market hard
marine
Monte
o
Argentan
Island of Giglio
Intelligence
NEWS HIGHLIGHTS
failure
Experts hint at power
built to a
A Carnival cruiseship
Concordia
modification of the Costa
power failure off
design suffered major
experts asking
Mexico in 2010, leaving
incident might
whether that earlier
casualty off
have parallels to Fridays ..............2
.............
the coast of Italy.
points
BDI slips under 1,000
fallen below
has
The Baltic Dry Index
time since
1,000 points for the first
in charter
January 2009, as a collapse
carriers
rates for the largest bulk the
down
capesizes dragged
dry bulk spot
composite of global
............. 3
market earnings. .............
based
List Intelligences land
Sourced from Lloyds
through
of our proprietary network
shipping.
radio receivers, part
which we monitor global
using Tableau
Visualisation created
ia could
Isola del
ta Concord ls
Giglio
for Cos
niva
red loss
with Car most
sell stake
THE insu ch as $800m,
the
Contship Italia toLtd,
one of insurance.
a company
be as mu ught to be
t
marine broking
Terminal Investmen
t tho
nean
accoun
ritten in
with close links to Mediterra
underw investment and t to
widely
a one-third
den
nt
nde
Shipping Co, has taken
es the inci Costa
Indepe
r Container
is compar
ecting
stake in the Medcente
firm Num Horizon, exp rance loss of
transhipment
ter
insu
Terminal at the Italian
..........5
OSLER
Deepwa to make an don market has
.............
ANDRYK AND DAVID
Tauro.
M
ALLY
Gioia
ia
W
of
y
hub
Concord 00m. The Lon , but industr
-$8
List
facility
at $550m for $513mimport
$600m
t)
E analysis of Lloyds
LNG
2012
den
plans
EXCLUSIV
ship
6,
India
inci
the
data shows
insured ed value.
January
imports of
(Day of
valued
Intelligence vessel tracking within 230 m of
ly
India is set to ramp up
eas
say it was
13, 2012
sailed
with a $1bn
sources hull and incr t spread thin
January
that Costa Concordia
liquefied natural gas
for
...8
accoun
said it
on a previous
er writes
$700m
Numis er
nivals
When an underwrit
t in a new import facility.
the coast of Giglio Island
Car
investmen
ket,
a
costs
h
than
ing
expect
shore
mar
Wit
to the
might
that escalating
le play
don
Ground
INSURERS predict
business like this, we
voyage, slightly closer
the Lon
any sing risk.
dent) Concordia will force
off, said
rates rise
ary 6, 2012for salvaging
tly hit rocks on Friday.
across
aframax
of inciCosta
rised if
but not a total write
an
y
subsequen
loss
it
Janu
the
Caribbe
partial
to
where
surp
(Da
of
deof
ly
be
tankers in
stands accused
capsized off the
13, 2012
to declare it a total loss,
would e than 5%-10% stocks are like
Captain Francesco Schettino
AP
The cruiseship, which
Aframax owners operating
owner Carnivalle
one H&M source.
January
changed
subsidising
Titanic and this is
an approved route.
ndcould make underwriters
held mor of the London ept perhaps
AP
a move
No one expected a
the US Gulf went from
in
Italian coast, had previouslyon the night of viating from
to hathat
big
in
re, exc
Most
enough to
if it had been
Giglio
on theon such risk in the
are too reluctant
bunker costs to earning
e exposu s to specialise and
what it could have been
course to get closer to
in
seizingto take
of
of
ips
San
som
di
how
aga
are
matter
point
a
e
.
e
in
Notte
the
Sh
change
La
from
for
will
tend
hav
to oncLiz McMahon
re
owners
e experts future, writes
cover operating expenses
further out to sea. It
less than 200 m away
August 14 last year
, which
fututhe
stars,
are Concordia has
Maritim cordia casualtyfate
weather and
previously
risks like this. It is
affeitcttook
rofile ship
Beazley
risk.
of the shooting
ofsCosta
when
k
The
days this week as stormy rates in the
underwriters deal with
collision
Lorenzo, the night
lower-p
cordias said.
t that ship
mme will
ta Con
the
took
we thin
in the London
seen in my career
route alsoCos
have
smaller Numis said.
for the
debateand
Costa Con
e progra
e the poin
route. The
fierce
smaller,
port delays caused charter rock-bottom
sparked
the biggest loss I have
owners
clubs,
10% ofCosta Cruises
,
to handle search are
onanc e rateauthorised
s.
ewhat
press hom too big
reinesur
weighing up the
from
how it could be
conferenc
vessels
ain P&I
than 5%- Speaking at a news At
ber of
than the 500 metres
therbrokers
closer
and
gh som
ng
t cert
anc
region to bounce back
and it is difficult to see
vessel
s more
the
thafar
and
Althou ia loss has a num Horizon loss
ices, whe rem
becomi cy servmarket
..............9
reinsur
t $60m. s chief executive
er hold
ClubCrociere.
oval, in ns of the casualty.
nex
erstood Lonby
s
company
don
implicatio
Costa
le play
the
levels...........................
..3
long-term
salvaged.
cord
Monday,
to the
is und
rgen
pwater
was
iseship
Itthat
the th,claimed
wreck
.....
no sing
the
total
IGs
hic
ute
the
a
Dee
or
eme
cru
loss
to
declare
say
stressed
deemed
.....
to
trib
Hydrograp
the Con
e
is
er
.
the
UK
age
con officer,
movLuigi Foschi,
don
salv
ng Nor
to cov e, the
players
If Costa Concordia
Meanwhil
strophe whether made by
ities to pwater Horizon of
m willPier ing the Lon
could level off
catadecision
rescue, to majorThe
, declining
clubs will the clai
industry
the includi ia, choose not hascos
similar
be
ts. a statement
wreck will fall on P&I
willat
Box trade growthhave
k
was taken under
ly
posed:
nt
e number
of a
The Dee
vessel a total loss
loss, removal of the
Office
decision
. The
bo machinery
ential issued
brought
tract, leav
l loss, a
eventwas
Britann of the pot
Underex
life
that poi loss con
irman Mar
in 2010. ad across a larg ly cost a relative
Costa Concordia
s of this, the clubs
hull and
the local martime
ofleft
The intra-Asia trades
andtits
on whether
ionr is
es
of
it as a tota
tee cha
shoulders. Regardles
comment
authorisat
whateve
ause
lines. The
own bes
r IG
is an
Costa,
excess
ing com
with
n ofbec
rs class
air.
also spre s and typical gible assets.
itsCarnival
hit, given the
l Commitone
will bear the brunt of
s afte
the permissio
its charts.ket
ers who
good fortune to specialist recent
ofthis
and
day
to deal
erwrite l loss or a rep
ant
ia ground
are set to take a sizable
ship is underwrit
Joint Hul using
existing
: Clearly
in
s would
market
market hit theauthority
the und
e that
particip
of net tan think the
the mar
confirmedAthatCosta Concordcost.
ents to
has
l rate
was reviewed. He also ondson said However,
y forUKHO
trades stability is evident
route
t
ctive tota rs will mak
theewa
1%-2%
ther
for
, we
array of liabilities.
after
The are aftethe
r amendm hip safety at around $550m.
casualt
closer
Edm
..............Back
t its ren
inciden
issues
constru
r. vessel was never
modest significantly seeing the
t liabilities
areailaround Giglio
ed on whe
erwrite
ths
t yea
the
dented imp
numbers from Drewry.
ced thaclaimed
gers is valued
ortantof the Unt
that
charts
The ship
Aside from significan
of
........3 a salvage
dot said
The und Carnival, bas e of the
pont sevItalian
More
the nex
anyrece
there
ger a
announ
eral
ide. scale than the19 mon tional passen force......
impact
rew Bar
fromssthe coast atunp
a larger
es available
onldw
static for
metres
to passengers and crew, with
estimates suggested
wor
n with
rna
And
500
the valu structive
logical pening will trig ent by
rais
Initial
into
relating
rs
than
ain
ve
e
gh
isio
inte
is
cho
rite
and
n
rem
asse
cuti
wei
dec
cam
psy
atioit issues.
ental damage
e to
f exein the voyage.
ts out
assessm
underw investig
or a con
charts
lations attempt was likely, due to Costa the
kable hap
e and
are fears of environm
IG chie
this stag falling on the
marine13, e as 1:300,000
repair cosit is a total loss would meet the
to be aregu
unthin nt change in risk case after
a full
However,
the ship.
s flag stat e seem
ms route taken on January
early at alill-fated
ld
If
Although
Concordias high value.
vessel this might
a sheen sighted near
0 3 the last 48 hours,
ntu clai
such tim
mak no
vessel,
it was tooany eveThe
vessel. , the P&I cover ck as this wou
significa rs, as was the
by the
by Costa Cruises
03
we canthe master of the
r
,matter,
rite
The International Maritime n
ertaken technical
mood has shifted over
d to be
however, was described
und
route
whethe
horities
total loss oving the wre
underw
izon.
has emerged
ion for
conventio
pre-planned
s suspected
is expecte It
ian aut
ter Hor
rem
is under investigat
as news of salvage plans
Organizations bunker
whot.
as a deviation from the
businesthe casualty on
for the
e.
the Ital
cost of
Deepwa Concordias lossthe industry.
buyblamed
costs have led
in February
e that was
commen
s nothas
ility issu
s will pay
s of
doehter,
and the potential repair
came into force in Italy
manslaug
to make a manoeuvr
Costa
further
rock.
d los
be a liab way, the club
ude
orbed by s to harden,
l said it expecte
ed and unknown
financial viability
an uncharted
cover liable but
hitting
,
, to incl
the
m this
an unapprovfor
est abs
cruiseship
Carniva the
some to question the
2011 making the P&I
unautho
Either
er. It
s isrised,
t it $95
case
liability gers and crew
the bigg se marine rate line. Many in
cov
thi
y
to cos
tionThis
charts critical to the
on any payout for a
alt
rly
ia
overall
cap
make
ely
sen
and
plans.
$1bn
dec
cau
rrup
a
could
e
su
such
Costa.
of
ms
lea
cord
with
bar
to
pas
ld
rs
ca
inte
gag
a
C
clai
for
cou
yea
s are
529understands that one
ta Con
master
ted
and unapproved
e in face
should the
sation
820List
several t marine rate
ation, bag
Lloyds
Both the approved
9 770144 820536
spill.
ceden
144
t Fromm
compen
the
ses a few hundreduse ofnCosfor the defence,
repatri
ending
pre
bern.
770
ts,
replacing
k tha
rai
of
2
al
cost
un
Her
9
cos
d
Page
the
within
on
thin
d
puts
by
if
prosecutio
passed
g
estimate
Continue
criminal
routes
t an
er a glob
year.
s for
medical effects losses. n-up costs
market
ens$4m.
rke
reportin
UKHO
ce chart at
ppthan
on the
and the tracking data,
red und
more
ker
issue
fall
al
te.
itional No rock is shownt.com
of each
ntother
/insuran
itatha
ships carpets
the ma metres
Addce
person may also be clea would also
adequa iseship is insu nged via bro
dslis Costa Concordia sank.
s
importa
Lloyds List Intelligen gne the position
news as
in which
throughrs
There
www.lloy
The cru gramme, arra anz Global
s, which clubs.
Colo
e news as it happen
rite
ritime
severalobtained
spillage
2.
P&I
ce pro
ude Alli erali,
y land based AIS receivers
bringing you maritim
you ma
Continued on Page
underw
proprietar
there are ulders of the it is understoodbs
insuran insurers incl
ee been
have
would
sho
Axa, Gen ing to
marineprovesthat the vessel
bringing
cover,
m. Clu
l Committ
on the
Aon. The & Specialty,
ord
s of P&I
first $10 the
wideondson, Joint Hul
ce, acc in place
ate
In term l will pay the
world
1
is
Corpor
Insuran
share
15:30 Pagina
niva
ip will
and XL
move
Mark Edm
surance e. German
xp 04-01-2012
m will
that Car and Steamsh
Chartis sources. Rein
ist.com
70x286.q
clai
lloydsl
mm
ld
Lloyds
d
all
the
gra
y
120111 Hydrex
l where
Standar excess. Then
industr parts of the pro k said that it wou
up poo
.
e
next $8m rnational Gro
for larg Hannover Rc ) for the ship
rs
r
affected
erwrite
to the Inte
m ($12.7m
reinsure
on, the
pay 10 machinery und whether
1
not an opti ped to restore
have to
sel,
Pagina
l and
ening is
crop
ship in Le
the ves
e to
The hul
16:56
ent of the container
loss of
If straight
e will be
s is don
2011
for the
the ocean The superintend
with the service
e devel- area on the blad balance. Thi ciency for
12-10will pay
vessel needed to cross
was also very satisfied
in-hous
effi
d
.qxp
technique The ro/ro
ynamic possiblemobdock
after the
would not Havre
ge of the nique, damage
in Algeciras, but
hydrod
ied out
Hydrex. He said, Even
he Hydrex flexible
com yds 70x286
r stern after its stop
Hydrex
ir is carr
port due offered by
tech
ng advanta
ater, the ieve the greatest
slist.
rex Llo
a Friday afternoon,
of repatwo underwate
to perform
ipment in have been allowed entrance to any
By taki straightening
underw
lloydHyd
was used
equreplaced
ach
typical late call on
s kind
ingwere
a team
diver/
tened
Thi
cial
100811
very strict policies
cold
cutt
seals
igh
d
sel.
mer
e
rex
Three
stra
ves seal repairs.
ope
to assemble and organize
Hydrex
blad
the U.S. Coast Guards
the tube
to com
n 25
nths Hyd
peller250
Thanks to managed
can be
vessel that was to
by the
day in Le Havre.
meter
ed ro/ro
to return d to drydock. with
the proon adev
environmental risks.
few mo out more tha All blades
that arrived the next
elop
divers
Algeciras
a
concerning
ship
of
stern
aft
continue
the
the
nee
ld.
g
n just
ried
the ship could
after four days, including
can be
an oil leak, while
from ent.
was also
allowin
out the
the wor
suffering
Hydrexs fast response,
ans car
pellers
with The job was completed
artm
berth.
e to that archseal
around to restore the operations with cy of the pro
technici
oil leak repaired and
of a 210 meter container
another
the
to
dep
with
vessel
clos
assembly
the
airs
of
k
schedule
tube
on its
shifting
bac
cien
rese
er rep performed
d in Le Havre to
des had Optimum effi ging the blades
propell
ship was partly repositione
only a minimum of delay.
were
the bla
r
brin
ice
ons
h
afte
by
e
operati
.
stop an oil blockage.
restored
isions wit
balanc
AHON
LIZ MCM
www.lloydslist.com
But cruise line insists

Fridays deviation fromd
route was unauthorise
Huge costs prompt

cruise cover rethink
rs
propelle
tube seal repairs
over 25 globe
Underwater sternand
lance to
the
Le Havre
stores bapairs across
Algeciras
re
x
re
Hyd ith blade re
w
in
coll
ers
due to
propell
d damage
suffere
or debris.
IPS IN
NG SH
KEEPI
inal form
00 (24/7)
213 53
+ 32 3
21
Phone:
213 53
+ 32 3
Fax:
their orig
ex.be
@hydr
hydrex drex.be
www.hy
KEEPING SHIPS IN
(24/7)
Phone: + 32 3 213 5300
Fax: + 32 3 213 5321
hydrex@hydrex.be
www.hydrex.be
BUSINESS
ESS
BUSIN
Lloyds List led the way with its Costa Concordia coverage
155
29/01/2014 13:40
Dunkerque-Port
A new hub in europe

Third largest port in France with regular shipping lines and
large-scale industrial facilities, the Port of Dunkirk specialises in
containerised deep-sea traffic, roll-on/roll-off cargoes to and
from the United Kingdom, and short-sea shipping with other
European countries.
The port also offers a comprehensive logistics base with warehouses
connected to the rail network.
/dunkerqueport
/DunkerquePort
29/01/2014 13:40
risk and insurance
Insurance is the lifeblood of shipping

underwriters bound themselves to the shipowners to make good any loss which they might suffer
By Simon Stonehouse, underwriter, BRIT
Y 1734 foreign trade had increased significantly

partly due to the Prime Minister, Robert Walpole,
and determination to avoid another continental
war. As a consequence there was more demand for
insurance, hence a sharp rise in the number of underwriters
who were beginning to base themselves in Lloyds. The
one particular inducement of Lloyds was a new publication
Lloyds List which quickly became the best source of
shipping information. Indeed it was Lloyds List which was
first to bring Walpole the news of Admiral Vernons capture of
Portobello in 1739.
Britain was drawn into the war of the Austrian Succession
in 1742. Ships travelled in convoy with the protection of the
Royal Navy. However, many masters would break away from
the convoys in the knowledge that they were insured in
Lloyds; they did this in order for their cargoes to reach the
market before their competitors. The downside to this was
the losses increased from 107 in 1741 to more than 450 in
1747. Underwriters were forced to dig deep in their pockets,
and history dictates not for the last time. The institutions of
Lloyds and its intelligence via Lloyds List were established
to insure the British merchant fleet importing cargoes from
the colonies and exporting manufactured goods.
joInt hull commIttee

The underwriters needed information about the quality of
ships they were insuring and The Society for the Registry of
Shipping was set up in 1760. The Register Book listed vessels
rated, or classed, after the condition of their hulls and
equipment had been surveyed. The subscriptions generated
by the Register Book paid for the surveyors to carry out the
work. This was the true beginning of classification, known
today as Lloyds Register, and the Society was the worlds
first classification society.
The underwriters bound themselves to the shipowners to
make good any loss which they might suffer. In the course
of time a policy emerged known as the Sale and Goods
Form (SG Form) which dates back to 1779. The Form was not
www.lloydslist.com
Register books were the true beginning of classification

a planned document, risks and exceptions were added on
an ad hoc basis. The form appears as a Schedule in the
Marine Insurance Act 1906. The pre-eminence of the London
Insurance market is founded on the SG Form. The form was
swept away in 1983 to be replaced by the Lloyds Marine
Policy or the Companies Marine Policy.
The Marine Insurance Act 1906 was a codifying Act
and was until last year the bedrock of not only marine
insurance law but insurance law as a whole in England.
The insurance law for personal insurances was revised
last year and the commercial law is under review. Many
countries inherited the Act, directly or indirectly, and
therefore the influence of the Act is worldwide. This added
to the strength of London and the legal structure which
positioned itself around the insurance market. London had
become a maritime cluster.
157
30/01/2014 14:19
risk and insurance
The inception meeting of the Joint Hull Committee was on the

28th September 1909, three years after the Act. The Committee
was populated with an equal number of Lloyds and Company
underwriters. The first chairman was Sir Edward Mortimer. He
chaired the committee for 11 years. The Joint Hull Committee
drafted an agreement which stipulated the rate increases, which
vessels they applied to and limitation percentage for increase in
values. The agreement stipulated that no underwriter should
take a larger share than 10% of the value.
The Agreement was regularly amended according
to the state of the insurance and shipping market. It was
disbanded for a year in the 1920s but the market realised
the importance of its role and was re-established after only
one year. In 1932 there was a market meeting to discuss the
perilous state of the market and whether the JHC should
cease. The chairman commented at the end of meeting that
if you drop the Joint Hull Agreement dont drop the Joint
Hull Committee. If we do, it would let London down and the
market in the eyes of the world where I can assure you from
the correspondence we have that the JHC is something to
reckon with on the Continent, America and Japan, in fact I
would say the whole world. This reflects the gravitas and the
influence of the JHC to marine hull insurance.
a committee with teeth

The Committee principally patrolled the insurance market,
but all that changed in the 1980s. There was a spate of losses
especially from bulk carriers such as Derbyshire, which sank in
1980 with 44 lives. The underwriters felt let down by some of the
classification societies. The monetary losses were mounting up
but more importantly there was significant loss of life. During
this period over 700 seafarers lost their lives. Underwriters had
to take action. Therefore the JHC published a new set of surveys
to address the bulk carrier issue amongst other things. The
surveys were the JH115 and the JH722, a condition survey and a
full structural survey respectively. In this way the JHC performed
a valuable task of improving the safety of shipping just like their
forebears when they established Lloyds Register of Shipping.
In a similar vein underwriters had to take action in the
in the early 2000s when during a 14 months period there
were $700m of losses mostly from passenger ships. The JHC
produced a wording called the Shipyard Risk Assessment
Survey (JH115) which clearly set out what the underwriters
required the surveyor to inspect. As a result of the JH115 the
building risk losses declined significantly and the survey
wording is regularly used today in an updated format.
Both of the ship and building surveys demonstrate
the changing role of the JHC and demonstrates that when
necessary it has the teeth to take action.
the committee principally patrolled

the insurance market, but all that
changed in the 1980s. there was a
spate of losses especially from bulk
carriers such as Derbyshire, which
sank in 1980 with 44 lives.
understanding no longer exists because of the competition
law and increasing regulation. The committees main
function now is to provide advice, research, and education
and to develop and maintain liaisons outside of the
insurance market. The Joint Hull Committee provides much
of the world with valuable assessment and leadership
as well as first class wordings, both new and evolving.
It played an invaluable role in cohesion with Lloyds and
external professionals to produce documents such as the
Arctic Report and the Removal of Wreck Report. Recently it
produced an exceptional report Marine Engine Damage
due to Catalytic Fines in Fuel in conjunction with Braemar
which is relevant not only to underwriters but to the shipping
industry as a whole. The committee is undertaking a project
to investigate the use of liquid natural gas as a fuel.
joint war commitee

The committee today is very active but obviously due
to competition rules the agreement or what became an
158
The Joint Hull Committee is an integral part of the Lloyds

marine market
www.lloydslist.com
30/01/2014 14:20
risk and insurance
The other important joint committee in Lloyds from a hull

perspective is the Joint War. One of the main purposes of the
committee is review and update the listed areas, which are
purely guidelines for market practitioners, where there is no
cover unless the underwriters have been advised and terms
have been agreed. The committee cannot force governments
to take action but it can heavily influence.
A good example is the issue with the piracy in the Strait
of Malacca. Following a high volume of piracy incidents in
the early 2000s the JWC Committee decided that the Strait
of Malacca should become a listed area. The chairman of the
committee at the time was put under significant pressure
form the local states to remove Malacca from the list however
he did not relent. By putting Malacca on the list this acted
as a catalyst for the littoral nations to start a co-operating
and the outcome being that the Regional Cooperation
Agreement on Combating Piracy and Armed Robbery against
Ships in Asia was established. This was the first regional
government-to-government agreement to promote and
enhance cooperation against piracy and armed robbery in
Asia. It was finalised on November 11 2004 and entered into
force on September 4 2006. To date, 19 States have become
Contracting Parties to ReCAAP.
servant of world trade

I believe the London Insurance market has played vital
role in the piracy situation in the Indian Ocean. The London
market led the way in offering war and piracy cover without
I believe the london insurance market

has played vital role in the piracy
situation in the Indian ocean. the
london market led the way in offering
war and piracy cover without which
world trade through that vital trading
route would have dried up.
which world trade through that vital trading route would
have dried up. The underwriters were there to provide
assistance and advice when needed and where and
contribute to the trade discussions and guideline such
as the Best Management Practice for Protection against
Somalia based piracy. Just like in the 1740s Lloyds
Underwriters came to the fore to enable to continuation of
trade.
It is often said that shipping is the servant of world
trade, but hull insurance is blood flowing through the
servants veins without which the servant could not
function. The London Hull Insurance market is the
premier insurance market which today is as flexible and
dynamic as it has ever been to meet the need of the
continual changing shipping environment with first class
security. n
Alondra Rainbow was hijacked in the Malacca Straits in 1999
www.lloydslist.com
159
30/01/2014 14:20
risk and insurance
On yOur side
A mutual mindset underpins
everything we do
www.gard.no
160
www.lloydslist.com
29/01/2014 13:40
risk and insurance
managing risk
as the northern shipping routes become a reality how will we balance future risk and
opportunity as we look back at the lessons of history?
By Michael Kingston, associate partner, DWF Fishburns
S the sun was setting on 279 years of Lloyds

List in paper form, three significant and
historic operations took place that highlight
the importance of maritime enterprise and how
boundaries in the marine world are changing - operations
that represent a milestone in world shipping in the era
of globalisation. These significant events highlight the
critical importance of risk management, both by industry
and by government, in order to make marine enterprise
safe and worthwhile as these advances are made.
On September 11, 2013 Yong Sheng arrived in Rotterdam
following a 35-day voyage from Dailan in China. The
conventional route, taking ships via the Indian Ocean, the
Suez Canal, and the Mediterranean Sea, takes 48 days to
complete. However, 13 days were shaved off the voyage
as the ship travelled through the Arctic Circle, transiting
the Northern Sea Route, becoming the first Chinese
commercial vessel to do so.
On September 17, 2013 Nordic Orion, carrying 74,000
tonnes of coal, left Vancouver and transited the Northwest
Passage on its way to the Finish port of Pori, saving travel
time by taking advantage of the 1000 km shorter route and
avoiding the Panama Canal, allowing the vessel to carry
25% more cargo. It was the first bulk cargo vessel to transit
the Northwest Passage.
human error
To put this in context, when the Norwegian, Roald Amundsen,
made the first successful complete transit of the Northwest
Passage in 1906 it took over three years.
Not only did these transits save in time, but there were
fuel savings and, importantly, reduced carbon emissions - a
key requirement for the maritime industry as it enters a new
phase. The routes chosen also removed almost completely
the threat of piracy.
In 2012, Arctic sea ice coverage was at a record low. As
the ice continues to melt, some experts have estimated that
shipping via the Arctic could account for a quarter of all cargo
www.lloydslist.com
Costa Concordia: most significant wreck removal in history

traffic between Europe and Asia by 2030. As Lloyds List
embarks on a new era there is no doubt that the maritime
world is changing its focus and looking north.
However, just after Yong Sheng arrived in Rotterdam
and only one day before Nordic Orion left Vancouver, a
third historic, but very different, operation was taking
place. Adjacent to the small and beautiful Island of Giglio
in Italy Costa Concordia was being righted and stabilised in
a significant phase of the most complex and costly wreck
removal in history.
Had modern technology been employed to prevent human
error, there would have been no casualty in the first place. It
is a timely reminder that, while it is important to recognise
opportunity, in order for opportunity to be maximised in a
sustainable way, industry must identify and address the risks
involved.
The importance of the Arctic is, of course, not just limited
to transits of the Northwest Passage and the Northern Sea
161
29/01/2014 13:40
risk and insurance
Route. The Arctic is rich in hydrocarbons and offshore

activity is increasing. All seismic, drilling, and production
operations in the Arctic will involve a huge increase in
marine activity as it is an ocean, but an ocean that has the
distinction of vast ice content which varies significantly,
requiring very different preparation and management
of operations on a case-by-case basis. Additionally, it
has seen an increase in cruise line activity. The Costa
Concordia casualty, in conjunction with the Deepwater
Horizon explosion, have brought cross-jurisdictional laws
governing shipping and oil pollution into sharp focus, and
raise particular concerns in relation to Arctic operations.
At present there is no International Maritime
Organization convention that states what ice class is
required to operate in the Arctic. The IMO is, however,
working on a draft Polar Code, with a particular focus on
ice-class, and it is hoped that the Polar Code will be agreed
in 2014. An intercessional meeting of the Polar Code
Working Group was held in October 2013 and agreement in
principle has been reached on definitions for the different
categories of ship to be covered by the Code, which
aims to impose requirements on ships entering different
ice areas in the Arctic. It has also been agreed that all
ships operating in polar waters should have a Polar Ship
Certificate and a Polar Water Operation Manual.
not fit for purpose

However, the IMO Guidelines are merely
recommendations. They are non-mandatory and to become
legally binding would require either individual states to
incorporate the regulations into their national legislation,
or the adoption of the Polar Code as a binding treaty,
perhaps in the form of an amendment to the MARPOL or
SOLAS convention. There is also a question mark over
whether the Guidelines go far enough and whether the
approach is too prescriptive.
What is clear it that SOLAS, as it stands, is not fit for
purpose. For example, life raft requirements are nowhere
near the standard required in the harsh Arctic environment.
Additionally, it is clear from worldwide reviews following
the Deepwater Horizon oil spill that there is a fundamental
disconnect internationally in oil pollution and safety
legislation. While some individual countries, such as Norway,
have stringent legislation that is fit for purpose, there is no
cross-jurisdictional regulatory agreement in relation to Arctic
operations.
This was highlighted in Lloyds of Londons 2012 report
An Arctic Opening; Opportunity and risk in the high North.
Indeed the Convention on Civil Liability for Oil Pollution
Damage Resulting from Exploration for and Exploitation of
Seabed Mineral Resources, which was aimed at dealing with
pollution from drilling operations on a worldwide basis, has
been lying on government shelves gathering dust since 1974.
162
Arctic cruises are becoming increasingly popular
What is clear is that soLAs, as it

stands, is not fit for purpose. for
example, life raft requirements are
nowhere near the standard required
in the harsh Arctic environment.
Additionally, it is clear from
worldwide reviews following the
Deepwater Horizon oil spill that
there is a fundamental disconnect
internationally in oil pollution and
safety legislation.
While MARPOL applies to ships it does not apply to oil
rigs and there is still a legal question mark as to what can
be defined as a ship, for the purposes of MARPOL. A gap
persists in international law that does not help with the
management of risk in the Arctic.
Moreover, the Nairobi Wreck Removal Convention, which
was agreed in 2007, still awaits ratification. It was not of
legal effect when the Costa Concordia casualty occurred.
It is still not of legal effect and will not be until 12 months
after the 10th State has ratified it without reservation
as to ratification. Four states, including Italy, signed
the convention with reservation, and therefore their
ratification does not count until 10 other states have ratified
www.lloydslist.com
30/01/2014 14:21
risk and insurance
it. Moreover, the convention does not apply to the 12 mile

territorial limit unless states opt in. In circumstances where
there is a shortage of skill, knowledge, and equipment this
all makes a good recipe for disaster in the Arctic.
history Lessons
And history has taught us that it usually takes a disaster to
instil urgency in implementing previously suggested regulation.
How long will it take for the Polar Code to have legal effect?
The SOLAS convention was devised as a result of the sinking of
Titanic. In the 1970s SOLAS was amended to take into account
the need to rectify inadequacies in oil tanker safety. But the
amendments were not ratified until after the loss of 50 people
when the Betelgeuse exploded at Whiddy Island in Bantry Bay,
South West Ireland in 1979. The ratification in 1980 arrived too
late to impose a simple requirement in relation to inert gas
systems that would have prevented the disaster.
The challenges presented by the drive to operate
heavily in the worlds last frontier are therefore
significant. While the evolution of IMO regulations is very
welcome, it is clear that the marine and energy industries
cannot afford another disaster. Operating in more extreme
environments, together with an increase in the size of
vessels presents significant risks that must be addressed
by industry and government alike.
The fall out following the Macondo oil spill is a reminder
of the consequences of getting it wrong. From an industry
perspective, risk management is critical to corporate social
responsibility and governance. Operations in the Arctic arena
need to be done properly or there will be repercussions for
companies and their associates far beyond the Arctic.
arctic counciL
The dangers associated with this new era in shipping were
brought sharply into focus by a fourth incident which also
happened during the historic transits. In September Nordvick
entered ice waters and punctured her hull while transiting the
The Deepwater Horizon oil rig explosion gushed as much as

60,000 barrels of oil a day into the Gulf of Mexico
Bloomberg
www.lloydslist.com
while the evolution of imo regulations

is very welcome, it is clear that the marine
and energy industries cannot afford
another disaster. operating in more
extreme environments, together with an
increase in the size of vessels presents
significant risks that must be addressed
by industry and government alike.
Northern Sea Route. Fortunately, its cargo of diesel fuel was
unaffected. Despite taking on water it was able to affect a ship-toship transfer and limp to Murmansk. It was an indication of what
might happen if preventative measures are not put in place.
So as we look forward we must learn, as an industry,
the lessons of the past. It is important for industry and
government to be proactive in increasing safety and reducing
risk, but industry must show leadership.
The Arctic Council is currently focussing on a code of
practice for the cruise industry which will gather momentum
during the Canadian chairmanship. The International Union
of Marine Insurers has backed an initiative for industry to
show leadership and create its own responsible standards
by signing up to the Arctic Marine Best Practice Declaration
(www.iumi.com) which is a significant opportunity for
industry to create standards that are fit for purpose. This has
been encouraged by senior Arctic Ambassadors, Sweden and
Canada in particular have demonstrated great leadership.
The marine and energy industries need to demonstrate
to the world that they are being responsible. Political
legitimacy to operate in such a fragile environment is at
a low level following the high profile incidents of recent
times. Until that responsible approach is demonstrated,
organisations such as Greenpeace will continue with highprofile protests and the perception that these generate
amongst the public will be complemented by reality when
an irresponsible participant brings the house down for
everyone. The enormous investments involved in Arctic
operations cannot afford that to happen.
That need not be the case if industry takes control and
declares responsible standards that extend beyond IMO
requirements in order to foster sustainable long-term
development of the Arctic. Such leadership would mean
that all participants in Arctic life will be winners. What an
opportunity to get it right. It will be interesting to see what
has happened in the worlds last frontier in another 279
years depending on what approach we take, we may not
have to wait that long. n
163
29/01/2014 13:41
risk and insurance
twenty first century law firm

with victorian roots
ince & co looks to a globalised future
By David Osler, finance reporter, Lloyds List
NCE & Co is, like Lloyds List, a longstanding fixture within

the London shipping community.
Despite being rightly proud of its Victorian roots,
however, Ince is, in its 21st century incarnation, a rapidly
expanding international commercial law firm that has
diversified into a number of adjoining areas.
The firm, from its inception, was essentially a shipping
law firm, explains Paul Herring, its head of shipping. But
over the years it has expanded into many other areas as well,
some of which are shipping-related.
Mr Herring is, incidentally, well-placed to tell the Ince & Co
story. Having joined as long ago as 1979, he has been around
for almost a quarter of its 145-year existence.
We have a big marine insurance practice, but we also
have a big non-marine insurance practice, largely born
out of the fact that we know the Lloyds market well and
underwriters who were writing marine business are now
writing other business as well.
We have moved quite heavily into the offshore market,
partly driven by some of our clients who have gone into that
area themselves and partly because it is a natural adjunct to
what we do anyway.
The tale begins in 1870, when a young Welsh solicitor
named Francis Ince established a London branch of the
Cardiff partnership Ingledew Ince.
During this period, the capitals importance as a port was
on the rise, with major expansions to its dock estate.
Much of the fledgling firms workload was made up of bill
of lading and charterparty disputes that would be familiar to
shipping lawyers today.
Inces two sons joined him in the business, but as Ince
& Cos official history records, their hearts were probably
elsewhere. In the early decades of the last century, shipping
activities were in decline.
The aftermath of World War I led to increased shipping
work, with a further breakthrough in the 1940s, when, thanks
164
to the efforts of a generation of talented young lawyers, Ince

began to win clients among Greek, US and other foreign
shipowners.
There was a transformation from being a family firm into
a much bigger and more commercial firm, Mr Herring says.
By the 1960s, it had begun recruiting lawyers of nonBritish origin, with its first overseas office set up in Hong
Kong in 1979.
Evidence in some trials is now shown simultaneously on screen

to the judge and the parties legal advisers and one recent major
trial was paperless
Today, it also has offices in Beijing, Dubai, Hamburg, Le
Havre, Monaco, Paris, Piraeus, Shanghai and Singapore.
Mr Herring believes: It was driven by our customers. At
that stage we had and still have a big practice in the Far
www.lloydslist.com
29/01/2014 13:41
risk and insurance
the Far East, including Hong Kong, where we knew a lot of

owners.
There was a realisation that with the business becoming
more international, we had to be able to service our clients in
Hong Kong within their time zone instead of through London,
being seven or eight hours behind.
Having a specialist casualty lawyer in the Far East
improved the speed of response in casualty cases, often
making it easier and quicker to get someone to the scene of
an incident in that part of the world.
Although shipping is no longer the be all and end all of
what Ince & Co does, Mr Herring is clear that the industry
remains very much at the heart of things.
But in an era that has seen the rise of a number of all-purpose
commercial law firms, often drawing enhanced clout from their
considerable range, what can a specialist bring to the table?
The reason you need specialist expertise is that shipping
has developed its own language. Owners and charterers
and their brokers speak in a certain tongue with which those
practising in shipping law have to be familiar, says Mr Herring.
Have you ever seen a charterparty recap? Unless you
have been around, you wont have a clue what they are
talking about.
In addition, shipping contracts are very often done on
standard forms, such as the New York Produce Exchange
form for time charters, the GENCON for voyage charters or the
Shelltime for tanker timecharters.
Lawyers therefore require not only familiarity with forms
but with the body of case law that provides the precedent
that gives the clauses, or certain words or phrases within
them, meaning.
We have a deep understanding of shipping as shipping,
its commercial backdrop, how it works, what sort of ships
there are, what sort of contracts are in place, who does them
and why, Mr Herring says.
The clients we work for expect us to know what is
happening in the shipping market, they expect us to have
expertise.
On the casualty side, they expect us to have a bunch
of people who have been on board ships, having operated
machinery and navigated them.
So although there are now more shipping law firms than
in the past, most resulting from breakaways from larger
firms, it remains true that these are not the kind of practices
that anybody could set up overnight.
Meanwhile, just as technology has revolutionised the
shipping media, leading to Lloyds Lists transformation into
a website rather than a daily newspaper, so it transformed
shipping legal services.
One thing that Mr Herring has noticed over the years is
the speed with which legal advice must be delivered has
increased beyond all recognition.
When I started at the firm, we depended on the
telex, which wasnt the fastest means of communication,
particularly if you had some long document.
Then we moved to fax and subsequently email and,
because those are pretty much instantaneous, clients now
expect to get their advice more quickly.
The digital era has changed everything. Word processors
have made the previously laborious process task of amending
long contracts far simpler and again virtually instant.
The Supreme Court asks not only for hard copies of papers
filed but also memory sticks, so that they can be viewed on
screen. Evidence in some trials is now shown simultaneously
on screen to the judge and the parties legal advisers and
one recent major trial was paperless.
People are ordering ships again, sometimes in some numbers
www.lloydslist.com
165
29/01/2014 16:55
risk and insurance
Word processors have made the previously laborious process task of amending long contracts far simpler
and again virtually instant
Another new development has been the continuing rise of
regulation.
Im not saying regulation is a bad thing, far from it, Mr
Herring says. But there is certainly an increasing amount of
regulation on the safety side and the environmental side.
That is proving to be a real burden for the owners, in
terms of expenditure, both on the ship and shore side.
There is a lot more form filling and reporting than there
used to be and that has had a byproduct for litigation, in
certain types of cases, for instance seaworthiness cases.
The demand for documentation on the owners side has
definitely increased.
Owners need to be able to produce their International
Safety Management code manual, documentation relating to
repairs, engine alarm printouts and much else besides.
The emails that have replaced letters and memos are also
subject to disclosure.
At the time of writing, there was a widespread expectation
that the shipping downturn is finally coming to a close and
markets were starting to improve.
People are ordering ships again, sometimes in some
numbers, and increased newbuilding activity is always good
news for law firms, particularly if accompanied by increased
market volatility.
If rates improve, some owners will seek the same
opportunities.
Conversely, should rates fall, charterers will seek to
renegotiate in the hope of reducing payments.
Greater numbers of newbuildings will mean opportunities
to review contracts, and if the sale and purchase market
starts to get firmer as it has in the recent past review
work and litigation is likely to follow.
166
Ince & Co has also been involved in a number of important

cases in the last 18 months, on points that either hadnt been
decided before, or where there was considerable uncertainty
as to what the law was.
In Isabella Shipowner SA v Shagang Shipping Co
Ltd (Aquafaith) [2012] EWHC 1077 (Comm), Mr Herring
successfully represented the owners of the vessel Aquafaith
in a case involving the circumstances in which, following a
breach of charterparty and purported early redelivery of the
vessel, owners can elect not to accept redelivery and instead
affirm the contract, claiming hire instead of damages.
A claim for hire is easily quantified and proven, whereas
a claim in damages raises issues of liability, remoteness of
damage and quantification.
So the decision should come as welcome news for
owners faced with threatened early redelivery in an adverse
market.
I always think it is fascinating that although shipping law
has been going for a very long time and we are dealing with
standardised documents, there are still a lot of points that
are out there to be answered, despite those contracts being
used every day and being litigated many times.
What of the longer-term future?
Mr Herring seems pretty confident about the prospects for
his trade.
There is always going to be a demand for shipping law, of
that there is no doubt, he predicts.
I dont think lawyers are very prone to flights of fancy. Its
very difficult to know what might happen in the future.
But that is one of the great, glorious unpredictabilities of
the business. No one really knows what the market is going
to do and thats what makes it interesting. n
www.lloydslist.com
29/01/2014 13:41
LEADERS IN
SHIPPING LAW
FOR OVER YEARS

the leading shipping lawyersa strong and
committed international player.
Chambers and Partners
Our legal advice to the maritime industry includes:

Admiralty | Cargo recovery & defence | Charterparties
Commercial contracts | Employment | Energy & oshore
International sanctions | Marine insurance | Personal injury | Piracy and
political risk | Property | Sale & purchase | Shipbuilding | Ship nance
Hour emergency response hotline: + ()

Download our Emergency Response iPhone app here or from
iTunes: http://ince.co/InceER
Please contact: shipping@incelaw.com

incelaw.com
Beijing
Dubai
Monaco Paris
Hamburg
Piraeus
Hong Kong
Shanghai
Le Havre
London
Singapore
29/01/2014 13:41
risk and insurance
Casualties
an innumerable number of disasters have occurred within the shipping and wider marine industries in
the close-to 300 years Lloyds List has been published, but there have been a handful that have had
more of an impact than others
By Christopher Munro, senior reporter, Insurance Day
hese casualties may have greater bearing on the

industry for a variety of reasons, be it the number
of deaths, the cost to owners and their insurers,
environmental damage or the introduction of new
regulation.
And while the sinking of Titanic in 1912 may be the most
famous marine casualty of them all, several other casualties
before and after have also affected the industry.
Until the terrorist atrocities of september 11, 2001, the
biggest disaster to have befallen New York City in terms
of loss of life was the fire and subsequent sinking of the
steamboat General Slocum in 1904.
The disaster decimated New Yorks German American
population with only 321 passengers surviving from 1,358
passengers onboard.
In the weeks that followed, it became clear too few life vests
were onboard, and those that could be found were rotten. Life
boats were in a similar state while fire drills were non-existent.
titaniC loss
In response, the Us government and state regulators
introduced new rules that ensured sufficient emergency
equipment was kept onboard vessels.
however, these rules did not extend overseas, and the
sinking of Titanic in 1912 was the first casualty to cause a
major overhaul of international shipping regulation.
After the ocean liner struck the ill-fated iceberg, it
became clear there were not enough lifeboats onboard.
Indeed, only 1,200 people were saved while thousands
perished. Astonishingly, Titanics life boat provision was
more than the required minimum.
Two years after the disaster, new rules forced vessels to
carry enough lifeboats for all those aboard. This regulation
International Convention for the safety of Life at sea was
introduced in 1914, although the outbreak of World War One
meant it did not actually come into force until 1929.
Aside from ensuring requisite lifeboats were on board,
other emergency equipment was made compulsory, new
168
An innumerable number of disasters have occurred within

shipping
in the years leading up to the

accident, the north sea was something
akin to the Wild West, with limited
industry oversight governing the
extraction of oil and gas. that all
changed following the gas leak, fire
and subsequent destruction of the
occidental Petroleum-operated Piper
alpha platform which caused the
deaths of 167 men.
safety procedures introduced and continuous radio watches
were made mandatory.
The casualty also impacted the marine insurance market,
and this papers namesake, severely. Insured for 1m, an
enormous amount considering total marine insurance losses
in 1912 were 6.8m, Titanics owner White star was paid its
www.lloydslist.com
29/01/2014 19:00
risk and insurance
Lloyds Lists coverage of the Napoli casualty
under OPA90 to something that more closely reflects the

likely cost of oil spill cleanup in todays world.
While the Macondo disaster will bring about changes to
the regulatory environment to the oil and gas industry in
the US, it was 1987s Piper Alpha disaster in the North Sea
that truly affected the global natural resources market.
In the years leading up to the accident, the North Sea
was something akin to the Wild West, with limited industry
oversight governing the extraction of oil and gas. That
all changed following the gas leak, fire and subsequent
destruction of the Occidental Petroleum-operated Piper
Alpha platform which caused the deaths of 167 men.
The UK introduced the Offshore Installations (Safety
Case) Regulations 1992 in response to the disaster. And
while the oil and gas industry was forced to improve its
operations, the associated insurance industry was also put
firmly under the microscope.
Following Piper Alpha, it became clear the way
the insurance and reinsurance market in Lloyds had
been operating was not in its best interests. All four
operating partners on the well filed claims, causing major
accumulations and aggregations for Lloyds insurers.
excess of Loss sPiraL

claim in full by Lloyds within 30 days of the ship sinking.
The grounding of cruiseship Costa Concordia in
January 2012 is also expected to bring about changes
to international shipping regulation once the trials and
investigations into the casualty are completed.
That more recent disaster has highlighted the potential
impact on the insurance industry however, with the casualty
having already hit the industry to the tune of at least
$1.7bn. More than $500m of this related to the vessels
hull, while the remainder is the current liability estimate.
It is not only passenger ships that have brought about
regulatory changes on the shipping industry, with cargo
vessels, be they for containers or petrochemicals, also
forcing industry overseers to impose new rules.
The Torrey Canyon disaster in 1967 saw tens of millions
of gallons oil affect coastline in the UK, France and Spain,
and brought about the introduction of the International
Convention for the Prevention of Pollution from Ships, or
Marpol.
The loss highlighted how many Lloyds syndicates

arbitraged risk rather than underwriting it, writing their
share, then laying virtually all of it off to reinsurers with a
very small retention and a decent overwriting commission.
It was exacerbated by syndicates reinsuring each others
reinsurances, leading to the infamous London market excessof-loss spiral that made it hard to quantify losses, ultimately
creating Lloyds Reconstruction and Renewal plan in the 1990s.
There have been many other casualties that have also
brought about wholesale changes to the way both the
shipping industry and its associated insurance market
have operated, including 1994s Estonia casualty, the Erika
disaster in 1999 and the grounding of the MSC Napoli in
2007. n
oiL & gas reguLation

Following its investigation into 1989s Exxon Valdez
disaster, US Congress introduced the Oil Pollution Act of
1990 (OPA90), a series of rules which meant companies
must have plans in place to prevent any oil spills that may
occur as well as have a detailed containment and cleanup
plan for accidents that might happen.
In the aftermath of 2010s Macondo oil spill in the Gulf
of Mexico, plans are afoot to increase the $75m liability cap
www.lloydslist.com
Lloyds Lists coverage of the Estonia ferry disaster
169
29/01/2014 13:41
risk and insurance
Shipping at the crossroads: pressing

questions await answers
We must ensure that a diversified industry is sustainable and profitable
for the whole seaborne trade community
By Janusz Fedorowicz, average adjuster, Fedorowicz & Partners
N increasingly globalised economy has seen trade

grow to an extent that the Portuguese navigators
of the 15th century could not have imagined when
they first sailed around the tip of Africa to reach
India in order to load much coveted spices. Their caravels
and galleons have turned into mega-carriers capable of lifting
22,000 containers and 400,000 tonnes of iron ore. At the
same time, what initially was rather simple has developed
into a complex network that has added many players to the
earlier shipper-carrier-consignee team.
Just now we appear to have reached a very complex
and often confused situation leading one to ask whether
the shipping industry is not turning into something of a
labyrinth. This is supported by daily reports of overcapacity,
very fierce competition, freight rates jumping up and
down, volatile investors, alliances, bankruptcies, serious
warnings from professionals and consultants and last, but
certainly not least, the growing ship sizes, a development
that raises many questions. This brief overfly, not intended
to be exhaustive nor pessimistic and certainly not denying
the achieved progress, raises the question of knowing how
far is it all sustainable and, indeed, profitable for the whole
seaborne trade community?
juSt in time
Here are some of the questions awaiting an answer.
How do carriers adapt to todays need of delivering across
the seas, and just in time, commodities and all sorts of
manufactured goods? How do carriers survive in a fluctuating
market ridden by recurring crises? Will they find in ever larger
ship sizes an adequate and lasting solution? Would the fight
for bigger market shares not be disrupting the industry?
How far can ports and access channels keep adapting to
such just in time deliveries and growing ship sizes, whilst
being ready to face any slackening trade flows? How do they
170
How far can ports and access channels

keep adapting to such just in time
deliveries and growing ship sizes, while
being ready to face any slackening trade
flows? How do they tackle a heavy megaship casualty that can bring to a halt a
substantial part of port activities?
tackle a heavy mega-ship casualty that can bring to a halt a
substantial part of port activities? Some recent casualties
have rung the alarm.
For their part, salvors are expected to develop equipment
capable of handling casualties involving mega-carriers,
wherever they may happen, whatever the nature of the cargo.
Where to station such costly equipment and experienced
teams so that they are available in time to produce a useful
result? How to finance it all knowing that the equipment will
only occasionally be required and how to remunerate the
rendered services? At what stage should the services be
switched from salvage to wreck removal on account of costs
and expected results? Here too some casualties occurred
over the past few years have provided serious warnings.
inSurerS under preSSure

Arbitrators are facing the dilemma of making awards in
respect of complex and lengthy salvage services rendered
under difficult circumstances to mega-ships carrying megacargoes, the end cost of which may at times come to be
out of proportion with salved values. On what criteria will
Arbitrators rely?
Insurers and P&I Clubs are under pressure to adapt and
assist with adequate coverage to meet new situations. On
which terms can they do it and at what sort of premium or call
www.lloydslist.com
29/01/2014 16:56
risk and insurance
The Rena clear up on Waihi Beach, New Zealand was costly and complicated
particularly when they have to integrate the concentration of
impressively high values, risks and liabilities on each single
ship and voyage?
It is the duty of governments to protect their coastal
environment while having to offer places of shelter for
distressed ships that may be carrying dangerous goods. How
do they reconcile these requirements?
International bodies have to set up conventions and rules
capable of covering the complex situations that are arising.
Can they do it in a way that leads to common interpretation
in order to efficiently meet real-life and situations and avoid
disagreements and litigations?
food for thought

A major question mark arises in connection with
seafarers who face recruitment based on costs rather than
on proper training and experience. Often they no longer
see the goods being loaded stuffed in locked containers
automatically delivered and piled up by cranes, regardless
of the nature and weight of the contents. With ever tighter
electronic shore control of everything going on on board
seafarers rightly wonder whether any room is left for
exercising some initiative drawing on their training and
experience? As a result is there any incentive to opt for
a career at sea? Yet the feel of the sea and of a ships
behaviour is still essential in the exercise of routine
duties and more so when dealing with unexpected and
dangerous situations. However, do seafarers feel they no
www.lloydslist.com
Bloomberg
longer enjoy the respect and prestige that should go with

their function? Not to be ignored is the fact that seafarers
with ever tighter electronic shore

control of everything going on on
board seafarers rightly wonder
whether any room is left for
exercising some initiative
drawing on their training and
experience?
are the source from which come pilots and other port
personnel, shore management staff, surveyors, and other
professionals whose experience at sea is most valuable,
often indispensable.
We know that between 80% and 90% of the very
considerable world trade is seaborne so that anything to
do with shipping is of vital importance. However, shipping
is obviously coming to a crossroads so that the complex
situation that is arising clearly requires in-depth
rethinking to ensure that a diversified industry is
sustainable and profitable for the whole seaborne trade
community.
Food for thought n
171
29/01/2014 13:41
risk and insurance
Lloyds List: three centuries of adaptation

edward Lloyds spiritual heir is not starbucks, it is Bloomberg
By Dr Richard Ward, chief executive, Lloyds of London
HREE hundred and twenty five years ago Edward

Lloyd set up his coffee house. But why was Lloyd so
successful? Why does his name live on in at least
two institutions the Lloyds market and Lloyds
List both thriving today? I believe that Edward Lloyd
knew that it was not coffee that made customers flock to
his house, but the information which he collected and
distributed.
Edward Lloyds spiritual heir is not Starbucks, it is
Bloomberg. He understood that, above all, ambitious
shipowners needed a reliable source of information.
This tradition lives on at Lloyds, as a publisher of
research into insurance data and emerging risks. And, of
course it lives on at Lloyds List, which has matured from
those gossipy sheets in the coffee house, from an early
paper called Lloyds News, to its present incarnation as a
leading source of shipping intelligence.
information is king
The first publication of the title Lloyds List was in 1734
and it seems to have become an authority in short order. In
1740, the chief waiter at Lloyds was so well informed that
he was able to go to Downing Street where he informed Sir
Robert Walpole, the Prime Minister, that the British
Navy in faraway Panama had won the battle of Portobello.
Perhaps he had seen an early edition of that
days Lloyds List.
In 1750 a naval captain published an ode about a voyage
to Venice which was Printed for Lloyd, well known for
obliging the Public with the Freshest and Most Authentic
Ship News. Today, Lloyds List remains the place to go
for the most up to date news, although it is more likely to
arrive by satellite than via the purple prose of a romantic
sea captain.
For more than two centuries, the Lloyds Market and
Lloyds List worked together to provide the marine industry
with everything it needed, from war hull insurance to
information. Both were international organisations
centuries before anyone had coined the term globalisation;
the Lloyds List of 21 December 1813, exactly 200 years
172
for more than two centuries, the

Lloyds market and Lloyds List worked
together to provide the marine industry
with everything it needed, from war hull
insurance to information.
ago, refers to shipping interests in Brazil, Argentina,
Turkey, India and Russia a reminder that these emerging
markets have been economic forces for rather a long time.
The formal relationship between the two organisations
ended in 1995, when the Corporation of Lloyds was
required to sell Lloyds List (in a management buy-out)
to meet its own very substantial liabilities at the time.
However, we continue to share a rich history.
whoLLy digitaL distriBution

During my time as chief executive of Lloyds, perhaps the
question I have been asked the most is: how has Lloyds
survived for 325 years? I believe that the secret to survival
lies in an ability to adapt. So, the decision to move to a
wholly digital distribution is another landmark in Lloyds
Lists long history of adapting to the needs of its readers.
Despite the sale of Lloyds List, our relationship has
remained close, with each edition of the paper being
placed in the underwriting room, next to the loss book.
From 2014, underwriters will need to look at the news on
their PCs and tablets, but the quality of the information will
be the same, regardless of the channel. We wish Lloyds
List all the best with this new venture. n
www.lloydslist.com
29/01/2014 13:41
risk and insurance
insurance TimeLine
1568
1986
Opening of the first Royal Exchange to accommodate trading for all

kinds of commodities including marine insurance
Lloyds moves into the iconic Richard Rogers-designed One Lime

Street, its current home, which 25 years later was Grade 1 listed by
English Heritage
1574
Office of Assurances oversaw standardisation of polices and clauses
and reduced the volume of legislation
1578
Queen Elizabeth I deprived the Hansas of their trading privileges and
expelled all Hansas from England
1601
1988
The Piper Alpha disaster, and Lloyds struggles to quantify its potential loss to the event, highlighting the deficiencies some syndicates
have in monitoring their exposures, and the realisation of the socalled LMX spirals existence
1991
Marine Insurance Act 1601 (Elizabethan Act) by Sir Francis Bacon titled An Act Touching Policies of Assurances used among Merchants
- included regulations for a Court of Arbitration
Lloyds posts a loss of more than 500m for the 1988 year of account
the single largest loss year in its history, reflecting claims from
Piper Alpha and heavy losses from asbestos, pollution and health
hazard (APH) policies written in the US in the 1960s
1653
1992
First coffee house opened (Pascua Rosea)
1680s
Lloyds is brought to its knees by the London Market Excess of Loss

(LMX) spiral and APH claims. Names are left facing huge losses, and
in some cases, bankruptcy
Edward Lloyd opens a coffee house in Tower Street with extended

services
1994
1769
Names monopoly on providing capital to Lloyds ends with the market welcoming the introduction of corporate capital for the first time
New Lloyds established at Popes Head alley
1771
Formation of the Society of Lloyds - 79 underwriters contributed
100 each
1774
Lloyds evolves into a more formal society and moves into new premises at the Royal Exchange on Cornhill.
Mid 19th Century
1996
The creation of Equitas reinsures each syndicates liabilities for policies written up to and including the 1992 year of account
1997
Conclusion of Reconstruction and Renewal Lloyds Settlement proposals are accepted by 95% of the markets members
2006
Establishment of mutuals to protect ship owners against increased

liability exposure, P&I clubs
National Indemnity, part of Warren Buffetts Berkshire Hathaway

group of companies, agrees a deal to reinsure the liabilities of
Equitas
Establishment of classification societies
2012
1906
Lloyds generates a record 25.5bn of premium, leaving it with profit

before tax of 2.8bn. Names now represent just 11% of the markets
capital
Marine Insurance Act
1928
Lloyds moves into new premises at 12 Leadenhall Street
1958
Lloyds continues to expand and moves into the newly constructed
51 Lime Street, since been demolished and now the site of the Willis
Building
www.lloydslist.com
173
29/01/2014 13:41

Main Tel: +44 (0) 207 887 2699

P148-174_RRISK&INS.indd
174
0253_17-10_PGI
Advert A4_Without
Address_AW.indd 1
29/01/2014 12:02
13:41
25/11/2013
SECURITY

Main Tel: +44 (0) 207 887 2699

_Without Address_AW.indd 1
P175-183_SECURITY.indd 175
25/11/2013 12:02
29/01/2014 13:36
SECURITY
A history of piracy:
how it has changed over the years
Lloyds List archives track the changing face of piracy
IRACY may have hogged the headlines in recent years

but it is not a new phenomena. In fact sea robbery
goes back 2,000 years to ancient Greece and plagued
seafaring nations until regular navies were capable of
protecting their territorial waters.
Pirates stole grain and olive oil from Roman ships and
Vikings attacked ships and coastal villages but pirate activity
escalated around 1620 and the following century is often
referred to as the Golden Age of piracy. During that period
different types of pirate evolved: privateers, buccaneers and
corsairs.
Privateers were authorised by their government to attack
vessels from enemy countries via a Letter of Marque; the
booty was then shared. Sir Francis Drake is one of the best
known English pirates and he used to the spoils he stole from
Spanish Galleons to remain in favour with Elizabeth I.
Without authorisation from government, piracy was
punishable by death and nations went out of their way to
make sure pirate executions were as grisly and made as
public as possible to act as a deterrent to would-be searobbers.
Buccaneers operated in the West Indies and attacked
Spanish ships in the Caribbean while Corsairs were either
Muslim or Christian and were active in the Mediterranean.
Like the first wave of Somali pirates and those responsible
for the swift ship to ship transfer of oil in the Gulf of
Guinea, many pirates in the Golden Age had good seafaring
knowledge having served on merchant or naval vessels in the
past.
Many also saw life on pirate ships as a more attractive
option than working on a merchant vessel as they were not
subject to the law of the land, crews were generally treated
better and the money stolen was shared.
When pirates captured a vessel, the captain would
generally ask if any of the crew wanted to join his pirate gang
and many would. This was called going on the account and
176
The Jolly Roger flag was first used around 1700

there were very strict rules to follow on a pirate ship; anyone
found to be stealing would be punished severely and an
example made of them.
going on the Account

Pirates used flags to indicate the threat they posed to other
vessels; originally blood red was popular and as time went
on pirate vessel created their own. The skull and crossbones
image, associated with the Jolly Roger, was first used around
1700 and originates from a symbol used in shipping logs to
indicate some kind of fatality.
Lloyds List documented a steadily mounting toll of
ships captured by privateers. In 1779 it showed that 656
were captured during the War of American Independence.
These losses were mostly to American and French privateers
whereas during the War of Austrian Succession shows most
www.lloydslist.com
29/01/2014 13:37
SECURITY
of the losses to Spanish privateers. In 1741 some 107 losses

were all to privateers and as the war continued the losses
stacked up. In 1744, 307 ships were captured while in 1747,
457 losses were recorded.
The greatest part of the financial loss from piracy then
and now is felt by the insurance industry. However in the
18th century the ransom system was very unpopular with
underwriters as it made it possible for privateers to collude
with victims and pocket the payout. In modern times,
insurers now charge additional war risks and kidnap and
ransom cover and some have argued that insurers, and the
maritime legal community for that matter, have made a lot
of money out of piracy. However, there is always the risk of
being hit with a hefty ransom payout which is certainly more
significant than the equivalent amount that would have been
demanded in the 1700s.
Pirates certainly got into the slave

trade and saw it as a viable and
rewarding source of income. Some felt
that it was the most profitable cargo
they could steal and the name picaroon
evolved for a captain that was both
slaver and pirate.
visible on in their dhow can sometimes be one of the only
ways to distinguish them from fishermen. Pirates in the Gulf
of Guinea tend to prey on vessels that are stationary or slow
moving, often close to port and in darkness.
INSURANCE LOSS
DECLARATION OF PARIS
Back then, pirates generally focused on the cargo when

pirating the vessel, in a similar way to pirates in the Gulf of
Guinea now. If the vessel wasnt ransomed, it may become
part of the pirates fleet or on occasion it would be sunk to
get rid of the evidence. If the crew did not join the pirate gang
they were killed, ransomed or sold as slaves.
Pirates certainly got into the slave trade and saw it as
a viable and rewarding source of income. Some felt that it
was the most profitable cargo they could steal and the name
picaroon evolved for a captain that was both slaver and
pirate.
Pirates in the 18th century had similar needs from
the vessels they used as modern pirates - to be fast and
powerful. Back then pirates needed their ships to have a
shallow depth below water so that they could hide around
shallow coastal regions ready for a surprise attack.
Currently there are two areas where modern piracy has
been most keenly felt: the Gulf of Aden and Indian Ocean
and the Gulf of Guinea. Somali pirates opt for small, fast
speedboats and work in crews of 10 or so. Their use of
motherships has meant that attacks can take place 200 miles
away from shore.
West African pirates use a range of vessels for different
purposes. Sometimes they are small boats or fishing vessels
and sometimes they hijack other vessels for the purpose of
enabling other attacks. There have also been cases where
pilot boats have been hijacked and then used in other crime.
The way in which pirates board vessels has not really
changed over time, even though the nature of vessels
obviously has.
They used to board by jamming the rudder so that the ship
couldnt be steered and then used grappling hooks to board.
It is not possible for modern pirates to employ such
a method to halt a vessel but Somali pirates tend to use
ladders to board vessels and the fact that they have them
While there was no formal antiquated form of Best

Management Practice in the 18th century crew were
known to grease decks and drop dried peas or glass on the
deck in order to disrupt a pirate attack. This, however, was
a risky manoeuvre not all masters were comfortable with
for they knew that if any effort made to stop an attack was
unsuccessful then the pirates would show no mercy.
www.lloydslist.com
Armed guards on commercial vessels were legalised in the UK

in 2011
177
29/01/2014 17:01
SECURITY
Recognised Best Management Practices now exist

and are indeed on their fourth cycle for Somalia. These
suggest ways in which vessels can and should protect
themselves from a pirate attack and insurers now factor
how far a shipowner adheres to BMP4 when calculating
premium.
The kind of piracy common in the 18th century ended
with the Bombardment of Algiers marking the end of
Barbary pirates hold on the Mediterranean. At the same
time Dutch warships patrolled southeast Asia and the
British Navy attacked pirates in the South China Seas.
Lawful privateering ended in 1856 with the signing of the
Declaration of Paris.
This legislation prohibited the use of Letters of Marque
meaning that piracy of any sort was now punishable by
death and the declaration was enforced by countries navies.
Coincidentally, the growing use of steam engines also
brought an end to common piracy as the vessels were too
fast for pirates to keep up with and board.
Low-level piracy has continued throughout the ages and
political groups have hijacked vessels as a means of protest
at points, However the dominant form of modern piracy in
the Gulf of Aden came as the result of the collapse of the Siad
Barre in Somalia in the early 1990s, which led to it becoming
a failed state and the people reverted to local forms of
conflict resolution.
SOMALI PIRACY PEAK

At this point other nations took advantage and started to
fish illegally in Somali waters. It is generally thought that
piracy was borne out of fishermen taking the law into their
own hands and trying to force foreign vessels in the area to
Naval support is crucial in the fight against piracy
178
Easing the problem of sea robbery in

the Gulf of Guinea will depend much
more on shore-based solutions in
Nigeria and finding some way of easing
the corruption. This will not be an easy
task and depends on a fundamental
shift in the way the country is
governed.
pay a tax to fish there. Piracy in the form that we recognise
today then developed and peaked between 2009 and 2012.
According to data from EU Navfor, in 2010 there were 174
attacks, of which 47 were pirated while in 2011 there were
176 attacks but only 25 were pirated.
Activity and success for pirates in the region has
continued to drop and experts have attributed this to three
elements: the work of international navies; shipowners
employing Best Management Practice and protecting
their vessels; and, perhaps most importantly, the use of
armed guards on vessels. While there have been several
attempted attacks this year, none have been successful
and those reported have been deterred by armed guards
on vessels.
COLLABORATION
Whether this combined effort has such a definitive end to
piracy in the region as the Declaration of Paris remains to be
seen. Another area where modern piracy is a problem is in
the Gulf of Guinea. This is not a new problem but it has got
progressively worse and now pirates are not only hijacking
for cargo but also holding crew members for ransom. The
solution which worked in the Indian Ocean cannot be applied
here as a large proportion of activity occurs in territorial
waters where international navies and armed guards are not
permitted.
Easing the problem of sea robbery in the Gulf of Guinea
will depend much more on shore-based solutions in Nigeria
and finding some way of easing the corruption. This will not
be an easy task and depends on a fundamental shift in the
way the country is governed.
It seems that piracy or robbery at sea will always exist
in some form, as it does on land. Vulnerable environments
allow it to thrive and it is then that the shipping industry is
forced to search for solutions to ease the problem. However,
they also need the cooperation of governments in order to
effect any change and if this is not forthcoming then fighting
piracy can be an expensive and difficult task. n
The UK Royal Naval Museum supported the historical
research in this article.
www.lloydslist.com
29/01/2014 17:01
SECURITY
cyber risks are growing

Piracy is not the only danger faced by todays shipping companies
ITH 90% of the worlds data having been

created in the last two years, the shipping
industry must accept the fact that vulnerability
to cyber risks is growing, according to PGI cyber
and technology director Sebastian Madden.
Mr Madden said attackers are seeking to exploit or
damage this vast and increasing quantity of electronic
information about a company, its clients, suppliers,
intellectual property and staff - including from their own and
their staffs online presence as well as their operational
systems.
Online hostile reconnaissance a fact of life, he said.
While the intent of states, terrorists and criminals maybe
traditional, the concern is that capability is increasing.
Not least because a cyber attack industry has developed
with capability that is now available for purchase or rent, Mr
Madden says.
Malware can be created to order and hackers hired
by the hour with a full spectrum of support services, he
explains.
The sophistication and ingenuity of attackers is
developing at the same pace as the rest of the IT industry.
For the maritime sector, Mr Madden says this means
vulnerabilities in company systems and those of its supply
chains, as well as systems on ships and ship to shore
communication systems, can be exploited by aggressors for
geo-political, commercial or criminal reasons.
One of the most obvious concerns is the potential for an
attack to shut down a large container port shutting down as a
result of a cyber incident.
States have shown they are prepared to use cyber attacks
in the energy and telecommunications sectors to cause
economic damage to their enemies.
Where regional rivalries are fierce and tensions high,
it is probable that states will have considered disrupting
operations at one anothers ports to cause economic damage
www.lloydslist.com
A container port would not need to be out of action for long to

have a major disruptive and costly effect
or gain a greater share of trade and possibly developed
the attacks to do so for use at a later date, Mr Madden
warned.
It is clear that a container port would not need to be out of
action for long to have a major disruptive and costly effect on
its operations and those of the shipping companies who rely
on them.
As Mr Madden says, these are large complex networks,
with a number of vulnerabilities in their systems and
gaps in their security. A recent study by the Brookings
Institution concluded that US ports lagged behind the rest
of US critical infrastructure in their cyber-preparedness
and estimated that a successful attack could cost around
$1bn per day.
One example of how a ports cyber security
vulnerabilities can be exploited for criminal purposes
179
29/01/2014 13:37
SECURITY
is the well publicised case of a drugs gang who used

vulnerabilities at the port of Antwerp to control the
movement of containers in which they were smuggling
drugs over two years.
In addition, most shipping companies face challenges
relating to their own cyber security. As Mr Madden points
out they have data which relates to their companys
strategy and commercial negotiations with key customers
and suppliers as well as automated mission critical
systems and an internet presence. They also hold personal
data on employees.
All of these are of interest to someone whether
those who wish to gain commercial advantage over them,
destabilise their operations, hi-jack their ships or simply
protest about their carriage of particular cargoes or use of
particular routes, he says.
Mr Madden says PGI has built its cyber security protection
around seven capabilities: intelligence, technical, human,
physical, experience technology and training.
inteLLigence
PGI acquired Olton a technology-led intelligence services
in March 2013. Olton has specialised over the last 13 years in
mining the internet including the 88% that is not accessed
by search engines - for information. This capability means
we can quickly analyse vast quantities of data from the open
and closed internet as well as social media sources to spot
patterns and trends and provide early warning.
technicAL
Any cyber offer is underpinned by people with high-end
cyber security skills who can analyse the technical threat
and events data, understand vulnerabilities and malware,

monitor networks, respond to incidents, do data forensics,
conduct penetration testing and design secure systems.
We have this capability in Strontium Red one only 37 UK
companies to pass the Council of Registered Ethical Security
Testers strict accreditation criteria which has been part
of the PGI Group since early 2013. PGIs ability to fuse and
analyse technical threat data alongside our vast open source
capability creates a powerful threat warning tool. Strontium
Red became part of PGI Strontium, PGIs cyber security
division on January 1, 2014.
All of these are of interest to someone

whether those who wish to gain
commercial advantage over them,
destabilise their operations, hi-jack
their ships or simply protest about
their carriage of particular cargoes or
use of particular routes.
huMAn
The most high-profile and it can be argued damaging
government data losses of recent years have been caused
by insiders Manning and Snowden. The human remains
the most vulnerable part of the computer system. PGI
The most high-profile and damaging government data losses of recent years have been caused by insiders
180
www.lloydslist.com
29/01/2014 13:37
SECURITY
employs human behavioural experts who can help

clients understand and mitigate this aspect of the risk.
Their expertise also allows us to tune and develop our
technology to identify and remediate that threat more
effectively.
Physical
It is easy to forget in the high-tech world of cyber crime
that the most effective access is often the door. The
attack on Antwerp port I mentioned earlier was in part
facilitated by a physical break in to gain access to the
network.
ExPEriEncE
Cost-effective cyber security requires a company to
balance investment across measures to reduce human,
physical and technical risks. PGIs senior executives can
draw on considerable experience of similar investment
decisions in senior roles in government and industry
to help clients with these decisions. We can also offer
analytic tools and methodologies to bring rigour to
the decision-making process. A multinationals global
architecture cannot be uniformly secure. Since effective
cyber attacks are not limited by geographical boundaries,
those looking to steal a companys information or
disrupt its operations are more likely to target the
weakest points in its global network human, physical
or technical - and are more likely to be successful if
they do. We encourage companies that are considering
investment in upgrading their cyber security to start by
looking at geo-specific cyber risks. This work can be used
to develop a prioritised plan which inform investment
decisions and allow vulnerabilities to be addressed in a
logical order and gives a baseline against which riskreduction can be measured.
TEchnology
At a time when staff with cyber skills are in short supply,
it makes sense to automate and let a machine do the
work wherever possible. PGI draws on its own and best
of breed commercial technologies to do this including its
own Mi:Fusion platform which underpins its intelligence
and analysis work. For more effective network defence,
the next generation of network monitoring systems, led by
Hawkeye G from Hexis, bring all the benefits of the more
traditional perimeter and endpoint monitoring systems,
the defence in depth systems and automated monitoring
products in a less resource intensive package. They add a
much more advanced, sensitive and automated approach
that is capable of addressing both the insider threat
both malign and careless and Advanced Persistent
Threats. It can reduce the detection and remediation rate
from hours and days to seconds without the need for
www.lloydslist.com
The attack on Antwerp was in part facilitated by a

physical break in
cost-effective cyber security requires

a company to balance investment
across measures to reduce human,
physical and technical risks.
human intervention reducing operator costs by several

factors. PGI has partnered with Hexis to bring Hawkeye G
to its clients.
Training
While Hawkeye G can help reduce the demand for
those hard to find cyber skills, PGI is also playing its
part in increasing the supply. PGI is the first company
outside the US to offer high-end cyber training in an
immersive environment. It has been working with KEYW
to take three of its courses covering advanced threat
methodologies, digital forensics and cyber skills for
managers - and develop them for UK and international
markets. Our first courses will be launched in the UK in
May. In the long run, this may turn out to be the most
important contribution we make to making cyber space a
safer place to do business. n
181
29/01/2014 17:03
SECURITY
The changing face of security

There is more to security than placing guards on vessels
he face of vessel security is becoming a more

complex phenomenon and more emphasis must be
placed on the whole security offering throughout
the supply chain, according to PVI managing
director eric Conway.
As a result of land-based conflicts and revolutions
becoming ever more regular, Mr Conway says clients now
wish their cargos security to be protected all the way from
the storage warehouse to the final customer delivery point.
For many operators the challenge is to balance costefficiency with the safe delivery of their cargo.
Mr Conway says it is imperative that maritime security
should not merely be considered as placing armed guards
on ships from point A to point B.
The supply chain as a whole is at risk of piracy, extortion
and criminal activity at some stage in the cycle, he says.
From the very moment a cargo is transported from
the warehouse to the dockside there are certain activities
that add risk to the operation. Those include theft,
manipulation of the cargo to house criminal items, and
human trafficking.
Mr Conway maintains the risk of piracy is today still
high. Despite a drop in successful pirate attacks, he points
out that the high Risk Area contains a routing for most of
the major trading routes in the world, for example: europe
to Asia, Japan to east Coast USA, and the Arabian Gulf to
europe or Africa.
The discharge location for a cargo may well be a hostile
environment enduring high crime and political instability.
Mr Conway says it is important for all parties to be safe in
the knowledge that their cargo is well secured physically,
through the implementation of a journey management plan
conducted to assess all potential threats.
In addition, vessels should have contingency plans
should a new routing be required and should also be able to
rely on expert geopolitical analysis to mitigate risks.
182
As soon as a cargo is transported from the warehouse certain

activities add risk to the operation
The supply chain as a whole is at

risk of piracy, extortion and criminal
activity at some stage in the cycle.
PVIs parent organisation, Protection Group

International, has invested heavily in building its
intelligence gathering and analysis capability, centred on a
market leading geo-political risk portal.
Mr Conway says many providers claim to offer the
complete solution to journey management but rarely few
www.lloydslist.com
30/01/2014 14:24
SECURITY
It is important to understand that there are three aspects to maritime security
can provide a bespoke service to clients on an individual

level.
All continents, countries and regions have individual
threats and risks that make such business ventures
extremely perilous to organisational success, he says.
The risk posed is operational, financial and
reputational. The damage inflicted on businesses can often
cause significant harm to an organisation, in some cases
resulting in businesses collapsing altogether.
Mr conway says there is good reason

behind the suggestion that maritime
security should be viewed not so much
as an overhead, but more of a profit
culture incentive.
Mr Conway says it is important to understand that

there are three aspects to maritime security: security
and transportation of cargo from pick up location to the
port of shipment; on board vessel security; and security
and transportation of cargo from port to delivery
location.
www.lloydslist.com
To incorporate separate security providers for different

areas of the end to end journey of a cargo adds uncertainty
and risk to the operation as fine details are likely to be
missed, especially if you have separate land based and
maritime providers, he says.
Mr Conway highlights that there is a risk that if several
parties are used for different stages, many considerations
could be ignored as that is the next providers job to sort
out.
From providing a single complete package PVI will be
driven to consider all elements of security along the supply
chain and ensure a linear operation throughout, he adds.
Mr Conway says there is good reason behind the
suggestion that maritime security should be viewed not so
much as an overhead, but more of a profit culture incentive.
To regard a business element as an overhead can often
be seen as a burden on a company, which the company
always seeks to drive the costs down, he says.
This inevitably affects the quality of service provided,
and in a service industry such as maritime security, the
gulf between companies which penetrate the market with
low prices and those which focus purely on providing the
highest quality service possible can be vast.
Mr Conway adds that instilling security within a
companys profit culture will enable shipping companies to
strive for the optimal provider based upon quality and not
on cost.
By doing so their corporate image to their clients will
be enhanced, as well as mitigating security risks for their
vessels at sea, and just as importantly, for the seafarers
who operate them, he says. n
183
29/01/2014 13:37
P184-205_FINANCE.indd 184
29/01/2014 13:46
Finance
29/01/2014 13:46
Finance
The future of ship finance and analytics

new Shipping financial tools are increasingly being developed in innovative ways. This article covers the
following key areas:
i)
Market timing and asset allocation
ii)
Volatility modelling and Risk management
By Richard Rivlin, chief executive, and

Dr Kaizad Doctor, director of analytics, Vesselsvalue.com
MarkeT TiMing and asseT allocaTion
arket valuations are the most widely used

but often suffer from irrational sentiment
driven behaviour and therefore an income or
cash-flow driven model is also useful. the
assumption for this model is that ships are the present
value of the discounted cash flow of their future earnings
and their terminal value. the primary critique for this
model is that it involves the use of a large number of
subjective inputs. However, when utilised in conjunction
with the market model it can reveal a lot about that
particular vessel and indeed the sector.
If the income value is above the market value, the
asset/sector could be considered undervalued and if the
market value is greater than the income value then the
asset might be overpriced. the difference between the two
values fluctuates. these fluctuations give timing signals
that are key for entry as well as exit strategies both of
which could be planned in conjunction with an analysis
186
if the income value is above the

market value, the asset/ sector could
be considered undervalued and if
the market value is greater than the
income value then the asset might be
overpriced.
of the order book and changes in the ton-mile demand

metrics.
additionally, momentum in prices can be used as a
good indicator for market timing. On the basis of the
momentum in price, for example, out of the 90 days in
a quarter if for 45 days the price of the capesize vessel
was increasing and 45 days the price was decreasing, the
momentum index would be at 50. an index greater than 50
would indicate a stronger positive trend in price over the
quarter.
the momentum index for capesize vessels allows us to
visualize the strong positive trend recently experience in
the market due to stronger chartering markets.
a strong indicator of market sentiment is the
depreciation profile of the assets as determined by
the market. a non-linear depreciation curve which is
proprietary in nature but has a large degree of flexibility
would illustrate the market conditions in the following
manner;
the changes in the depreciation profile over market
cycles give a view on what the market perceives as the
www.lloydslist.com
29/01/2014 13:46
Finance
visualizing the sale and purchase

activity would be an additional
indicator of the markets preference for
vessels of a certain age or deadweight.
additionally, we often hear things like
what are the greek owners buying
this year, which are indications of a
form of herding behaviour often seen
in the shipping markets.
expected working life of the vessel. In a weak or frozen

market there is a strong likelihood of the vessels getting
scrapped earlier and the converse is true for strong
markets. If vessels are bought or sold beyond 3rd special
survey this may indicate that the freight markets are
strong or indeed the contrary in that brave buyers expect
to profit from future activity. this hypothesis is confirmed
by plotting the scrapping activity through time for a
sample vessel type where there was lower scrapping
activity at ages below 25 years in good markets but not in
poorer markets. the depreciation profiles would only work
given enough liquidity in the markets for individual vessel
types.
Visualizing the sale and purchase activity would be an
additional indicator of the markets preference for vessels
of a certain age or deadweight. additionally, we often hear
things like what are the Greek owners buying this year,
which are indications of a form of herding behaviour
often seen in the shipping markets. We are able to work
out emergent trends in the sale and purchase activity and
which are great for spotting a bargain as well as in certain
cases, a bubble.
risk ManageMenT and innovaTive

financial producTs
Income volatility and asset volatility are two major
concerns in the shipping community. there are existing
tools to mitigate the income volatility both in the physical
as well as in the paper markets.
asset volatility is difficult to calculate since the vessels
depreciate with a non-linear profile. to eliminate this
effect depreciation is removed to produce a fixed age
report. the historical (conditional) volatilities can be
computed for each sector.
www.lloydslist.com
187
29/01/2014 13:46
Finance
These distress sales are compared

with the model values to arrive at a
measure of loss given default or a
measure of recovery rates. in colloquial
terms, this is referred to
as a haircut.
Observed volatility is used as a key input for various

financial products;
i) Pricing optionality: direct options on the value of
assets
ii) Value-at-risk models: testing the extreme drawdowns
on a portfolio of vessels based on parametric or nonparametric models
iii) Mertons default model: testing the probability of
default, distance to default and yield on the debt
iv) Optimal asset allocation based on portfolio
optimization type exercises: having a portfolio
of physical or financial assets benefits from
diversification.
188
theoretical probabilities of default obtained from models

that use volatility as their primary input are often augmented
with realized inputs (i.e. rate of recovery). this needs a
comprehensive database of sale and purchase activity from
which to derive sales of distressed assets. these distress
sales are compared with the model values to arrive at a
measure of loss given default or a
measure of recovery rates. In colloquial terms, this is referred
to as a haircut. In this instance tankers have the best rates
of recovery both in terms of the median rate which is around
89% but also its dispersion (standard deviation) which is
the lowest amongst the three chosen asset classes. these
values are useful not only in calibrating risk models but also
for banks to compute a model based on the determinants of
defaults as well as recovery rates.
conclusion
Future excellence in shipping is going to depend on how
we handle the ever greater number of signals coming our
way. n
www.lloydslist.com
29/01/2014 13:46
Finance
The changing face of finance

The past 30 years have seen many changes
By Prof Costas Grammenos, chairman, Centre for Shipping,

Trade and Finance, Cass Business School
LOyds LIst has played the pivotal role in

communicating to the wider shipping industry our most
memorable moments at the Centre for shipping, trade
and Finance, Cass Business school, City University
London over the thirty-year period of our existence and even
before. I will look at some very briefly and then will turn my
equally brief attention to the future.
We are credited with the introduction from 1984 onwards of
shipping finance as a new academic subject some academic
colleagues have believed discipline through our research,
teaching, public lectures, keynote speeches, conferences and
debates in London, athens, New york, Hong kong, shanghai,
singapore and elsewhere. the first major reference in Lloyds
List, in december 1977, was when I presented a paper on the
need for credit analysis at the Institute of european Finance,
chaired by the late Professor Jack revell.
Later, Lloyds List commented again on the above
methodology which was now included in an academic
publication. this methodology was adopted by most
international banks in the early 1980s during a severe
shipping crisis. It was this publication that became the basic
raw material for the innovative shipping Finance course
unit, within the equally innovative Msc degree in shipping,
trade and Finance introduced in 1984 at City University. this
www.lloydslist.com
in this climate of banking losses and

lack of banking capital we turned our
attention to capital markets.
Msc has educated a few thousand shipowners, bankers and
shipping executives.
sTudenT success
In 1985 we were observing and analysing the withdrawal
from or decrease of their financial activity of major providers
of shipping loans; these were banks such as, National
Westminster, Bank of america, Chase, Chemical, Bankers
trust, let alone the badly wounded Continental Illinois. In
this climate of banking losses and lack of banking capital we
turned our attention to capital markets, which we believed
were a viable development for certain kinds of shipping
companies. during that period, we expressed our views, which
were published in Lloyds List. that was the beginning of a new
school of thought for shipping Finance.
In 1986, Nikos tsakos, then a student of our Msc course,
wrote a dissertation on raising funds for shipping companies
in the Us capital markets which, after two years, he put into
practice by raising equity funds at the New york american stock
exchange; and in 2003 at the New york stock exchange. Many
189
29/01/2014 13:46
Finance
followed his example. some were our graduates, and some

our graduates were instrumental in the process of raising the
funds.
In 1989 at the first shipping Conference of the american
stock exchange Lloyds List was present while I was
discussing shipping equity listings in New york. I raised the
question of why the high yield bond market, a first cousin of
bank syndication, was not used in the shipping industry.
In 1994, Lloyds List, in three articles written by different
analysts, published and commented on extracts from my
presentation at the annual Nautical Lecture, where I was
giving a very strong warning that the investment bankers were
making fundamental mistakes in the analysis and sale of high
yield bonds to the investors on behalf of shipping companies.
Within five years the market collapsed.
again in 2000, when the high yield bond market was
plummeting, Lloyds List recorded a presentation of mine
where I expressed my belief that the High yield Bond Market
will return as a source for shipping funds, and will remain as
such, but the companies would have to be larger and their
cash flow has to be a promising one.
changing TiMes
In april 2007, when the renaming of our centre was
announced, Lloyds List published a special issue where
the contribution of the centre was presented and the views
of leaders of the shipping industry were recorded. By that
time, and since 1991, many academic papers of our then
young staff (Professor kavussanos, Professor tamvakis,
Professor Nomikos and dr alizadeh) had been reflected in
Lloyds List and, at a later stage, extracts appeared from
papers of dr Papapostolou and dr Pouliassis, and a number
of Phd students in shipping finance and, more generally, in
risk management.
Looking briefly at the some of the issues that will keep us
busy I can see that many of them are very familiar to us, but
they will be at a more advanced level.
Banking? Of course, many banks have decreased, or
ceased altogether, their financing to the shipping industry.
Capital adequacy has been an important issue in the last
three decades and of course profitability of the financial
institutions remains another related major issue which
will impact the bank shipping decision. But shipping
provides profit to banks not only via shipping loans but from
auxiliary services as well. Cost of banking funds of course
has increased and may increase further until the moment
the banking system that finances shipping companies will
increase its reserves and its capital base will have been
replenished. then, and if the market changes from a banking
to shipowning market, pricing of shipping loans may become
more competitive.
Capital markets, equity and bonds? yes, they are for
experienced shipowners and possibly for relatively new ones
190
private equity, if they learn enough

about shipping, may also assume the
role of providing the seed capital to the
newcomers in shipowning.
who have novel ideas and interesting stories. Capital markets
will undoubtedly be there.
Private equity? It is already here and has shown a strong
interest in shipping. It will continue to do so as long as the
shipping market is considered to be at a lower phase of
the shipping cycle. the critical moment will be when the
developments in the shipping market are not according to
their expectations. this will be their testing point. Private
equity, if they learn enough about shipping, may also assume
the role of providing the seed capital to the newcomers in
shipowning, as most of the bankers are and will be reluctant
to do so.
ks and kG funds will certainly continue their existence.
ks projects are now based on their own merit and not on the
decision of the Minister of Finance. While the wounded kG
system has to be reorganised. It will take sometime, it will, but
eventually it will follow the steps of the ks.
topics such as derivatives and risk management will
continue to be in the agenda of practitioners and academics.
there are so many issues to be discussed in the shipping and
finance industry and so many suggested solutions (or to be
suggested in the future) to disagree.
as far as I am concerned, I will now have among other things to
become familiar with the digital format of Lloyds List, something
that many other readers of the List have long since done. I have
been an irregular reader of its paper version since 1969 and a
regular reader since 1971: one seventh of its existence and a lot
more than half of my life. n
www.lloydslist.com
29/01/2014 13:46
R
N
READY
NOW
Finance
Our big ship infrastructure is in place now:
Tallest & widest cranes in North America

Deep water
Closest US port to Asia
Business-friendly environmental programs
Intermodal choices
No congestion
Transload facilities
See what else the Port of Seattle can offer... www.portseattle.org
29/01/2014 13:46
finance
A life in shipping
a long view on what it takes to succeed in shipping
By Jeffrey Sterling, former chairman, P&O
hen thinking back on my business life I realised

very early on that I wanted to control my future and,
like my father, was an entrepreneur.
When I founded Sterling Guarantee Trust
in 1969 I also knew my strengths but more importantly, my
weaknesses, so I was very fortunate to have a highly talented
team.
By the time I joined P&O, although we knew little about
shipping we had learnt a great deal about managing with an
entrepreneurial thrust.
I joined P&O as a non-executive director in 1980 and assumed
the role of chairman and chief executive to fight off the aggressive
takeover bid of Trafalgar house, using the firepower of Sterling
Guarantee Trust. We merged the two companies and the SGT
team took over the top management of the combined group.
Long-term relationships, trust and respect for each-others
talents created a tightly knit team.
even in a maritime industry noted for venerable institutions,
age is no guarantee of quality, but The Peninsular and Oriental
Steam navigation Company was one of the nations great
enterprises, and its reputation was international.
A mArk of quAlity
Its quartered flag first flew in the 1830s and the familiar initials
a decade later. This is a mark of quality is what was said.
Times and ships changed, but one thing did not: the founders of
P&O set the highest standards in their vessels, the people who
operated them and the services they provided, and I did my best
to remain true to this philosophy into the 21st century.
State-of-the-art ships, up-to-the-minute port and logistics
facilities and cutting-edge information technology get nowhere
without the right people to run them and to treat customers
properly. Throughout P&Os existence it strove to have
motivated highly-trained staff and top-quality leadership, at
sea and ashore across the world, putting into practice common
standards: quality of service quality of people, an international
viewpoint, an entrepreneurial approach, pride in P&Os
reputation, care for its image.
192
unlike so many shipping concerns

P&o never was a family concern, but
somehow it managed to generate a
family feeling.
Unlike so many shipping concerns P&O never was a
family concern, but somehow it managed to generate a
family feeling and people seem to have liked working for the
company. Its founders were hard-headed businessmen but
they were also liberal in their politics and generous to their
workforce. The company ran schools for the children of its
seafarers and instituted a fund to support deserving former
employees when such things were rare. And at P&O, if you
stayed long enough and had the ability, a clerk could rise
to be chairman, as did both Arthur Anderson and Thomas
Sutherland.
Anderson helped establish and Sutherland consolidated
the Victorian image of P&O as an unofficial branch of the
British Raj, the greatest of imperial lifelines, a national
feeling for the company that few other concerns inspired.
From 1910 P&O added other shipping lines to its family,
growing to nearly 500 ships by the mid-1920s and becoming
one of the largest shipping combines in the world, though
still concentrating on passenger and general cargo trades.
After the Second World War, with the empire gone and the
related mail contracts severed, it diversified into new trades:
tankers in the 1950s bulk carriers, container ships and roll-on
ferries in the 1960s, gas carriers in the 1970s.
In that decade too came significant non-transport investment
including house-building and construction, reorganisation
into operating divisions and the implementation of
enhanced corporate identity. But the P&O I joined had changed
enormously and was sadly perceived of being in danger of
losing its way and was under actual threat from an outside
predator. The threat became a fact.
In 1984, having analysed the company, we decided a springclean was in order and while preserving the ethos of the past
www.lloydslist.com
04/02/2014 16:37
finance
we needed to concentrate on our core businesses. Return on

capital employed became a watchword and enterprises that did
well attracted the new tonnage that they needed and deserved.
critical mass
The Falklands Campaign in 1982, and especially the attention
given to Canberra the Great White Whale together with
all the other company ships that went with the fleet, renewed
national appreciation of P&O. But the loss of 193 lives in the
Herald of Free Enterprise casualty in 1987, belonging to the
newly acquired Townsend Thorensen Ferry Line, due to a lack
of positive reporting, reminded us of the fragility of life at
sea and the importance of people in our businesses. It was
paramount that passengers and crew deserved the highest
safety standards. The highest safety regulations were enforced
group-wide.
Although by now we were 45% of all British shipping we
needed to be considerably larger in world terms to have critical
mass. I was never fond of joint ventures and consortia in the
shipping industry so it made sense to be able to buy out our
partners in Overseas Containers in 1986, bringing in at that time
Robert Woods to the Group. Ten years later we bought out the
Nedlloyd share of North Sea Ferries. We combined our container
shipping business with that of Royal Nedlloyd to make it into
one of the key companies in the container world.
By now we were feeling the pressure from the City to reduce
our diverse holdings and we carried out an disinvestment
programme to concentrate on our global interests, enlarging our
container and cruise division and in particular our fast growing
world-wide ports business.
In 2000 we decided it would be advantageous to float our
cruise division, P&O Princess, and wanted to get together
with Royal Caribbean Cruise Line but Carnival Corp, realising
how powerful that combination would be as a competitor, was
The famous house flag still flies on P&O Cruises ships

and P&O Ferries
www.lloydslist.com
The P&O brand lives on.

determined to intervene, and despite antitrust considerations,
and somewhat to their surprise, Carnival was allowed to bid and
succeeded in acquiring P&O Princess which included the fast
growing Aida Line, becoming a key part of Carnival.
flying the flag

In the late 1990s it was becoming apparent that by our sheer
size it was not necessary for us to remain a publicly quoted
company and any debt we might need we could obtain from
the capital markets. We did a lot of work on a scheme to do a
management buy-out but as by that time we only had a very
small percentage of the company we were advised we would
unquestionably be over-bid.
A company like P&O has to have a 50-year view, not just the
next quarterly statement and the short-termism of the world
financial centres, particularly London, was not in keeping
with our strategic long-term needs. It was very instructive how
successful the Swire Group has been over two centuries and
remain totally privately owned.
I knew all the key players internationally but unlike us they
had shareholder control over their companies. I knew that
when Bruce and then I stood down the company would be bid
for and that of course is what happened.
However, our famous house flag still flies on P&O Cruises
ships and P&O Ferries.
Finally, I was very encouraged by the recent campaign
to show the world and particularly in the UK how important
shipping is to this day. It is all about service and the top
management being seen to be the custodians for future
generations. Like Lloyds List and Lloyds Register over the
centuries, management must ride the shock absorbers of
change and anticipate the speed of modern day technical
development. That is what wins and creates a culture and trust
with all ones employees and leads to corporate pride.
As I said when I took over at P&O: To manage is a privilege,
not a right. n
193
30/01/2014 14:25
Finance
The future of ship finance

as bank pull out and KGs fail, the industry looks to new sources of funding
By Alex McInnes, US correspondent, Lloyds List
He interest and strategies of private equity, an illdefined and nebulous group of disparate investors,
in shipping itself a fragmented industry of mostly
private and disparate operators are never easily
defined in sweeping terms.
the idea, though, that most of these new players to ship
financing are simply playing the cycle for the short-term,
as traditional banks pull back and lick their wounds, could
be an overly generalised, and misleading, label. those that
have deployed capital are entrenched and for the others
who have yet to pull the trigger; they are still waiting, even
as asset values and day rates begin to creep up.
still, when capital market participants do talk about an
exit for private equity, they usually point to the taking their
targeted investments through the initial public offering
process. the number of these public stock offerings
are likely to increase one of the many tools
available to an ever increasing financially sophisticated
ship operator but not so that the industry will
dramatically transform to one that is dominated by public
companies.
Private equity investing in shipping will need to be patient
with respect to their exit window, because of the shipping
cycle, said Jeffrey Pribor, global head of Maritime Investment
Banking for Jefferies. the market is receptive today, but its
very difficult to predict where its going to be in three-to-five
years from now. Windows of opportunities vary with the cycle
and it may not correspond with their exit strategy.
exiT sTraTegies
Putting private equity interest in context, using the
traditional american measuring stick of a baseball game,
the wave of investing is now currently in the third inning,
according to Jay rodin, chairman of Brock Capital Markets,
which helped advise a $700m partnership between eletson
Holdings and Blackstone this fall.
Mr rodin, who believes there will be further pouncing
by private investors, said that private equity will likely look
to exit shipping just short of the final ninth inning.
194
Ship financing is changing
shutterstock.com
you never know the bottom and you never know the
top, he said. you never want to exit when the game
is over, because you dont realize its over until its too
late.
One example of the long-term commitment to the space
is the creation by private investor kohlberg kravis roberts
of a $580m specialty finance company called Maritime
Finance Co. that firm, established in august, will look to
provide flexible capital that can withstand the markets
volatility, according to kristan Bodden, the companys chief
executive.
Maritime Finance Co is not here to call the top or
the bottom of any shipping cycle, he said. We are
here to transact deals that we believe make sense with
counterparties we believe make good partners over the long
haul.
Others, however, believe private equity is a passing
phase, in that the new players coming to the market are,
in fact, betting on the cycle. svein engh is the global head
www.lloydslist.com
29/01/2014 13:46
Finance
of CIt Maritime Finance a newly created finance provider

from the leasing giant CIt. enghs group, which launched
late in 2012, is focusing on bilateral transactions, or smaller
club financing deals where CIt is the sole lender or is
working with just a handful of other lenders.
fleeTing inTeresT
CIt deals, this year, included providing a $61.8m
senior secured credit facility to a portfolio company
of alterna Capital, a private equity firm based in
Connecticut. alterna will acquire three medium-range
tankers.
also in 2013, CIt provided a $83.7m loan to Pst tankers
to help finance eight product tankers.
Mr eingh sees private equitys interest as fleeting.
I dont think this is permanent capital coming in,
he said. Private equity sees that the time is right now
and they will exit in time, through sales or IPOs. It is
a good thing, because there is a need for capital.
still, despite a high level of interest from private
investors, the deal flow has been limited, Mr Bodden said.
private equity money needs more

than vessel owners pounding their
fists on the table saying that this is the
bottom of the cycle.
kristan Bodden, Maritime finance co.
that theme will likely continue, he added, due, partly to a

lack of transparency from ship operators.
Private equity money needs more than vessel owners
pounding their fists on the table saying that this is the
bottom of the cycle, Mr Bodden said. Private capital
needs alignment of interests and transparency when it
comes to committing capital to deal. these two traits
are not exactly the hallmark of most traditional shipping
deals. n
Private equity money needs more than vessel owners pounding their fists on the table saying that this is the bottom of the cycle,
Mr Bodden said
www.lloydslist.com
195
29/01/2014 13:46
196
tenP184-205_FINANCE.indd
com book ad.indd 1
29/01/2014
27/01/2014
12:12:3913:46
12:39
Finance
Ten mantras of the secret of success

and sustainability in shipping
Top-tips for aspiring owners
By Ravi K Mehrotra, executive chairman,

Foresight Group
1. Perseverance, overall positive outlook and a personal
culture of giving your very best to a successful business
life in shipping based on 24 x 365 days.
2. Learn the know how of shipping but more importantly

learn the know why of every action taken in shipping.
3. always remember shipping is a service industry. It only

rents space in its ships to cargo transporters (charterers)
who are your clients so service them well. today, in fact,
shipping is nothing else but a glorified trucking business
and clients (cargo shipper/charterers) are always looking
for cost reduction.
4. your social responsibility is to reduce the impact on

climate change by maintaining your ships well and
manning them with responsible crew members.
5. In order to survive and be successful in shipping,

one has to be continuously abreast of all world news,
natural calamities, natures bounties and, international
regulations which may affect shipping, political
uncertainties and financial crisis as well. all have an effect
on shipping activities. shipping is a service industry;
anything which affects the cargo owner (your employer)
will also have effect on your bottom line. this may also
give you an opportunity to make additional earnings if
possible as normal shipping operations are a very poor
cash-flow generator.
www.lloydslist.com
6. One has to be fully aware on a daily basis of the activities

of the ship sale and purchase industry. remember
everything in your company is for sale, only if the price
is right. this may help you to improve your equity in the
business.
7. shipping is the most cyclical industry in the world.

Need for transportation space is governed by the
volume of world trade and a countrys coastal trade
requirements. Whereas in shipbuilding, you have no
say as it is one countrys own decision which has no
connection with world trade. a case in example: China
shipbuilding.
8. during boom times in shipping it is prudent to create

company surpluses for rainy days. It is advisable to have
at least a 10% surplus of the companys required cashflow but kept in an investment account away from the
general account to avoid your staff becoming lethargic in
collection of outstandings.
9. Being a cyclical industry it is not a bad idea to have some

diversification in the company to keep the cash-flow going
when shipping is in recession. do not forget you have to
pay at least employees wages both in office and on ships,
as it is these people who will take you out of the recession
the moment they see the green shoots. they are young
hence they will see the green shoots before you do.
10. during your active life, eNJOy the passage as it is the
happy memories during the passage which will take you
out of the crisis if you face one. n
197
29/01/2014 13:46
Finance
198
www.lloydslist.com
29/01/2014 13:46
Finance
audit is the platform for

ey greece
Wide range of professional services offered to shipping
By David Osler, finance reporter, Lloyds List
He Greek branch of ey is one of the countrys

leading providers of professional services to the
national shipping industry, claiming to serve more
than half the medium-sized and large operators and
15 of the two dozen or so listed Greek shipping entities.
such has been its success that ey partners dimitris
Constantinou and yannis Pierros believe the firm will
shortly have something like 100 professionals dedicated to
meeting the needs of shipping clients.
although all the main international accountancy
players maintain a local presence, as far as shipping is
concerned, they assess the main competition as coming
from deloitte, PWC and Uk shipping specialist Moore
stephens.
But what gives ey a head start, they believe, is the
solid expertise it has developed over many years since its
forerunners first set up shop in 1926.
Dimitris Constantinou (left) and Yannis Pierros (right)
www.lloydslist.com
ey greeces shipping involvement

took off in the 1980s and has now
reached the point where it considers
itself to be the market leader.
ey Greeces shipping involvement took off in the 1980s

and has now reached the point where it considers itself to
be the market leader.
We have people who joined us as juniors and now are
managing our client portfolio in shipping, while others
sometimes serve shipping clients on an ad hoc basis
with people who have not been developed through their
shipping practice, says Mr Pierros.
the audit is the platform. reliability in our audit
services is what the stakeholders, the lenders and the
shareholders of our clients value.
the economic difficulties being faced by Greece right
now are staples of television news broadcasts and not in
need of repetition here.
However, Mr Constantinou and Mr Pierros are keen to
stress that shipping is an international sector and thus
remains relatively insulated from such woes.
even so, it has not been conferred immunity from the
global financial turmoil that commenced with the credit
crunch of seven years ago, and which was followed by the
collapse of Lehman Brothers in 2008 and the subsequent
dramatic plunge in all major shipping segments.
Mr Constantinou says: the downturn in the shipping
industry begun in May 2008 and that, in combination
with the financial crisis, has negatively affected the
industry. But this has nothing to do with the Greek
crisis.
199
29/01/2014 13:46
Finance
EY considers itself a market leader in Greece

Indeed, Mr Pierros feels that ey drew bold conclusions
from what happened and seized the chance for growth in
the face of adversity.
We saw it as an opportunity to invest further and
expand our client portfolio and our service offerings. since
then, we have been continuously growing, he says.
Its a combination of increased demand for our services
and also strict application of our competitive advantages.
We have not panicked with this crisis; we have put
things into context, and it appears that this played out well
for us.
ey benefits from being part of a global network and
is able to utilise resources from various other hubs that
happen to have expertise in various areas.
so as ey Greece boasts substantial expertise in risk and audit,
it can also draw on the experiences of its London, Hamburg and
New york affiliates, particularly in areas such restructuring work.
It has been involved in the torm and excel Maritime
restructuring exercises and is also supporting major
international lenders, not based in Greece.
the vital lessons learned should make it easier for everyone
that must, of necessity, partake in a restructuring to go
through the ordeal next time round, Mr Constantinou believes.
200
Of course, all parties involved in the restructuring

process are much more mature and experienced and I would
expect that whatever restructuring is to be done going
forward, it would probably be done in a more structured
way, more beneficial for both parties, he says.
Mr Constantinou and Mr Pierros do not believe that the
lending climate for Greek shipowners will get any easier in
year ahead, as international and Greek banks are unlikely
to find themselves in a position to increase leverage to the
shipping community.
that will, in turn, lead to increasing use of other forms
of finance, including private equity, bond issues and new
initial public offerings.
Banks still have their liquidity issues, Mr Constantinou
says.
Basel III is coming, rules that they have to follow, and it
is getting quite expensive. a lot of the time the bankers say,
we are here, we are present. But the difference is that the
lending is more expensive.
Probably that is why we see the different forms of
financing, like the private equity funds or the capital
markets, which were not that welcomed in the past
years.
www.lloydslist.com
29/01/2014 13:46
Finance
ey Greeces analysis indicates that for 2014, the

combination of vessel values, rates, and the cost of capital
provided by the banks will not be sufficient to enable many
owners to cover their debt service.
Mr Constantinou and Mr Pierros point out that the firm
can help owners anxious to tap funding to locate somebody
able to do so.
In ey we have a separate sub service line just for this
purpose, not only for shipowners but for the others as
well, says Mr Pierros.
We can always help bridge the gap between the
potential lenders and what the shipowners are expecting to
get or expected to offer.
so long as they have a compelling story to tell, it
appears that the most reputable Greek shipowners have not
faced any significant obstacles in getting finance at terms
they believe are fair.
the traditional families and in general the shipowners who
are willing to be open with the banks and discuss issues in
advance and in an honest way, they will find a solution.
One of the alternative sources of funds is, of course, private
equity. Mr Constantinou and Mr Pierros are well aware that
private equity funds are very specific in their investment
strategies.
In most cases, they wish to have an exit strategy in place,
even prior to making an investment, and usually work to a
horizon of more than just five years.
they also require a greater degree of control that shipping
banks did in the past, and this means that getting the two
sides together isnt always an easy process.
even so, they can sometimes come to terms, as witnessed
by the deals announced in the last couple of years.
Mr Pierros observes: there is a need for fine tuning in
their approaches, in their mentalities.
But it appears that for private equity houses that
want to do a deal, and for owners that are honest and
willing to be transparent with their partners, they can

finally make it.
We can help private equity and our clients to sit down at
a table, and be helpful in the translation of the request.
Indeed, Mr Pierros has himself visited the Us and has
met with some 20 private equity houses in a bid to find out
their expectations of shipping deals.
as a result, he firmly expects more private equity deals with
Greek owners in 2014, although he does offer a word of warning.
this creates not only an opportunity but a threat. Having
lots of private equity houses quite heavily investing in
shipping and maybe massively ordering [vessels] may create
distortions in the supply and demand balance in the industry.
also, I can foresee the private equity houses wanting to
exit at the same time in two or three years time.
Having lots of investors looking for an exit at the
same period might also create a distortion, not only to the
physical market but also to the public market.
Interestingly, he expects most of the vehicles jointly
established between private equity and shipowners to
remain in place, even once private equity is out.
either new investors will emerge to take up the slack, or
shipowners presumably aware of the funds game plan right
from the outset will be ready to take control themselves.
the Greek shipping community is also now more familiar
with the initial public offering process and, on the most
optimistic scenario, Greek IPOs in New york could eventually
bounce back to levels last seen in 2006 and 2007.
Both are agreed that there is no significant risk of fallout
from Greeces economic and political situation, which the
Greek shipping industry has addressed in various ways.
It remains to be seen what will happen to the industry in
the coming period and whether the worst is over.
Nevertheless, shipping remains very much the place to
be for ambitious young Greeks and ey is confident that it
remains at the top of the shipping services game. n
Shipping remains very much the place to be for ambitious young Greeks
www.lloydslist.com
201
29/01/2014 13:46
Finance
shipowning: out with the old, in with the

new but for how long?
as shipping moves from family to corporate ownership, owners are facing new presssures
By Michael Tusiani, chairman, Poten & Partners
HeN I began my career some 45 years ago,

most independent shipowners were familyowned or controlled. at that time, even the
relatively few public companies were run
in a similar manner. the tanker market moved slowly as
did communication. It was not uncommon for offers and
counters to be made with days of validity. your word is
your bond was an unspoken rule. reputational excellence
was highly valued and there was pride in providing quality,
in-house ship management.
Owners had an emotional attachment to their vessels.
Operations and contract performance were considered to be
as important as chartering. the tanker market was a close-knit
community of shipowners, oil companies, brokers and lenders,
many of whom had long-standing relationships built on trust
and experience.
Owners have an emotional attachment to their vessels
202
For decades, oil trade patterns remained essentially

unchanged. typically, the Far east and Us were the major
importers of crude oil and refined products, while the Middle
east, south america and africa were the major suppliers.
tanker demand analysis was relatively straightforward. ship
design and propulsion systems slowly improved and financial
markets remained stable for extended periods.
shipowners employed different decision-making strategies
based on their individual interpretation of political events as
well as economic and market data. they visited charterers
and brokers to seek varied opinions and before making any
decision to buy, sell or term charter a vessel, the owner would
assess the risks involved. Face-to-face communication was
essential to relationship building in order to gain a competitive
advantage in an opaque market. after all, their money and
reputation were at stake.
undersTanding wildcards
a shipowner understood that it would be his or her unique
ability to smell unexpected events that could result in a huge
profit opportunity. Wild cards, such as wars, strikes, canal
closures, embargos, sanctions and accidents, would be the
difference between merely surviving and thriving. the ability
to capitalise on any of these events was the key to making
fortunes overnight. If owners took too much risk and their
noses proved wrong, the consequences would be borne by
the next generation.
today, the industry and the business world have changed
dramatically. Markets, financial and otherwise, move very
quickly. Volatility is sought after. rapid communication, via
email, texts or instant message, is now inescapable and has
had many positive effects on the industry. technological
advances are being made at a far greater pace and trade
patterns are complex and difficult to analyze. However, as a
result, decision-making has become reactionary.
We find ourselves in the midst of a major industry shift
driven primarily by changes in the ownership structures of
www.lloydslist.com
29/01/2014 13:46
Finance
A captivation with short-term returns has changed shipping

companies. shipowners motivations for sourcing external
capital have been mixed. some families have looked to exit
the business entirely while others have sought such capital
to seed major expansion. When traditional sources of capital
dried up, some owners needed emergency funding. the
stakes are high and shipowners understandably feel the
need to spread the risk. regardless, this transformation
has changed the parameters in which many companies now
function. the advent of public money and unconventional
sources of capital such as private equity and hedge funds
have changed the landscape by effectively separating
the ownership of physical assets from their day-to-day
operations.
changing TerMs
With the shift to other peoples money, the primary focus
for public shipping companies is to demonstrate quarterly
progress. For private equity, the time horizon may be longer.
Most company directors spend more time with their equity
partners and potential investors or financiers than they do
with customers and brokers. as there is a greater pressure
to produce quicker returns, commercial decisions are made
accordingly potentially compromising operational integrity.
www.lloydslist.com
shutterstock.com
it now appears that shipowners

have put making short term
profit above all else.
It seems that todays new market entrants do not see the
need to build full-service organisations to serve customers
as a priority and to protect ones owned assets. With the
increasing distinction between ownership and management,
more third party managers are being employed to handle
owners technical and commercial affairs. It now appears that
shipowners have put making short term profit above all else.
the long term doesnt seem to matter. after all, why should it?
It is other peoples money.
some say the influx of institutional money will help the
industry become more financially disciplined. this may or
may not prove true. But, I predict that these new shipping
structures will not last. Over time, oil companies will not stand
for them. they will not be willing to expose themselves to
operational risk and they will certainly want to know who is
moving their oil. there will come a day when owners fortunes
and reputations will be back on the line. n
203
29/01/2014 13:47
Finance
capital markets and their transformation

as financing changes access to capital markets has become a significant competitive advantage for
shipping companies
By Nicolas Bornozis, president, Capital Link
ItH bank lending becoming more difficult to

obtain and more expensive, access to capital
markets has become a significant competitive
advantage for shipping companies. this is
particularly important in todays market conditions, as
shipping markets appear to start a rebound. the timing
of asset acquisitions can determine to a large extent the
ultimate investment return so the ability to raise capital at
the proper time is of critical significance.
shipping companies can raise capital in several ways:
through bonds, convertible bonds, common stock and or
preferred share offerings, and rights offerings, which provide
existing shareholders with the opportunity to participate in
the companys new share issuance.
But not every shipping company can tap the bond or
equity capital markets. Investors expect operational size, a
clear strategy and competent management, a transparent
corporate structure, proper corporate governance,
satisfactory free float and share trading liquidity, as well
as consistent investor relations informing shareholders
and prospective investors of the sector and company
developments and outlook.
all this has a transformational impact on shipping.
realising the vast potential of the capital markets,
shipping companies are becoming more structured, more
transparent and investor friendly. smaller companies may
find it increasingly difficult to compete and thus industry
consolidation may accelerate to create the larger entities
investors are accustomed to.
even though shipping is a major industry of vital
significance for the global economy and trade, it still
represents a small fraction of the overall stock market
capitalization. New york has become the hub for shipping
company listings from all over the world, boasting
currently 44 listings. still, their aggregate market
204
Not every shipping company can tap the bond or equity capital
markets
capitalization is only $30bn, a tiny fraction of the overall
Us market capitalisation. this shows the potential for
further growth.
shipping companies are becoming part of a core
investment portfolio for institutional and individual
investors, who in the Us, account for almost half the market
activity. Vehicles such as master limited partnerships meet
the demands of investors for yield while providing shipping
companies with the ability to raise significant amounts of
capital for expensive assets with long-term employment,
such as LNG vessels.
Capital markets are expected to play an increasingly
important role in shipping, providing permanent or longterm funding to this highly capital intensive industry. and, in
the process, this will transform shipping into a much more
corporate activity. n
www.lloydslist.com
29/01/2014 13:47
Finance
accelerating change
as shipping peaks and troughs become more frequent, shipping must look to altenative funding sources
By Harry Theochari, head of transport, Norton Rose Falbright
He global shipping industry has experienced

innumerable peaks and troughs in the 279 years since
the publication of Lloyds Lists first issue. In the
past 10 years however, the highs and lows have been
amplified to levels which I have not experienced during my
professional career and, I suspect, which not even Lloyds List
has previously witnessed. the coming years are set to bring
further changes, particularly with regard to how the industry
funds itself.
the fallout from the global financial crisis has resulted in
new regulation such as Basel III which is forcing many banks
to reduce their balance sheets, while bank credit committees
have become wary of lending to an industry as cyclical as ours.
high and lows

during 2012, less than $45bn was made available by banks to the
shipping and offshore industry, down from $129bn in 2007. the
dramatic reduction in the amount of traditional bank debt finance
has caused a great deal of pain for certain sectors of the industry,
but has resulted in alternative forms of funding becoming
available, even if these are not sufficient to fill the funding gap
We have seen an upsurge in equity deals and the reemergence of the capital markets, particularly in New york. We
expect to see a further increase in these types of transactions
into 2014 and beyond. In the Us, where the shale oil and gas
boom has the potential to change the shape of the global
shipping industry, a number of the major, private equity
players are making increasingly encouraging noises regarding
their continued interest, and their intention to expand their
investments, in shipping.
the bond market is also playing a greater role. shipping
companies need capital and the bond markets are providing
this. While the Nordic bond market has been a traditional
choice for the global shipping and offshore industry, we
are advising on more and more transactions in debt capital
markets as diverse as Germany, singapore, the dim sum
market in Hong kong and the samurai bond market in Japan.
the Us bond markets are also becoming increasingly active.
While these alternative sources of finance cannot meet the
shortfall in bank debt finance in its entirety, they are leading to a
more innovative approach towards ship finance and drawing in
new investors, which can only be good for the industry in the longer
term. I suspect we may well see, first, the commercial leasing
models that have dominated aviation finance, emerge in shipping,
albeit in a slightly different form, and secondly, export credit
agencies playing a role in helping to create a secured bond market.
corporaTe realignMenT
New York has emerged as the leading capital market

shutterstock.com
www.lloydslist.com
Inevitably, as new players come into the market, shipping

companies will be required to become more open about their
business and increasingly corporate in their approach in
response to these investors demands for greater disclosure
and transparency. this will bring further changes to a sector
that has historically attracted entrepreneurs, adventurers and
mavericks who by their very nature are notoriously secretive.
trade routes are continuing to change with the realignment
of the global economy and this will have a significant impact
on the way shipping funds itself and the investment it attracts
in the future. as we begin to emerge from the turmoil of the
past five years, new and exciting opportunities are opening up
for shipping, bringing further change for our industry. n
205
29/01/2014 13:47
Meet the teaM
RichaRd Meade, editoR

Twitter: @Lloydslisted
LinkedIn: uk.linkedin.com/in/lloydslisted
area of expertise: i am leading the digital revolution at Lloyds List, but my focus is quality journalism and that means pursuing
a near 300 year old tradition of authoritative business analysis that answers the most pressing issues facing our readers.
What does digital mean to me: the shipping industry has evolved and Lloyds List has, and will always, evolve with it. the globalised
shipping markets do not wait for the postman and delivering yesterdays new tomorrow as a print newspaper is no longer the best we
can do. this next stage in our evolution at Lloyds List will ensure that we are able to innovate and expand our digital platforms, offering
more in-depth analysis, more powerful online tools and more news in context - all backed up by an online archive and the most powerful
intelligence database in the business. But most significantly it will allow us to focus on providing the most accurate and up to date
service in the market.
nicoLa good, digitaL PuBLishing ManageR

Twitter: @LloydsListNic
LinkedIn: uk.linkedin.com/pub/nicola-good/15/620/7a9
area of expertise: My focus is on optimising the user experience for our subscribers. Lloyds List has an extensive archive
and abundant proprietary data sources my role involves putting this material together with quality content so that those
accessing lloydslist.com enjoy a comprehensive overview of market changes and are kept in the picture as trends emerge.
What does digital mean to me: the advantage of an online environment is that a story can continue to evolve as it is enriched
with context, data and related material and my 2014 digital ambition is to ensure that our subscribers can benefit from us
adding value in this way.
heLen KeLLy, digitaL content ManageR

Twitter: @HelenKelly_LL
LinkedIn: uk.linkedin.com/pub/helen-kelly/23/604/869
area of expertise: i manage and edit our digital news, analysis, comment and data agenda and co-ordinate our social media
content. this involves managing a team of in-house journalists alongside a number of international stringers and outside
contributors. i also work very closely with our data division Lloyds List intelligence.
What does digital mean to me: Fast, accurate and informative news reporting; in-depth analysis backed with solid data;
provocative commentary from industry insiders; and the chance to get creative with how, where and when that is presented.
haL BRoWn, senioR RePoRteR tanKeRs

Twitter: @hal_lloydslist
LinkedIn: uk.linkedin.com/pub/hal-brown/36/798/3
area of expertise: i write about the energy-related sector of shipping, with news, analysis and insight on the oil and gas tanker
markets in order to present a comprehensive picture of the global energy market, which embraces three distinct areas of
activity: upstream, mid-stream and downstream. transportation falls in the middle, and throws light on how trade patterns
may be shifting as, for example, us domestic energy production soars.
What does digital mean to me: the move to digital is like the move from clippers to steamships 150 years ago. at first, people
were sceptical, horrified even, but this gave way to begrudging acceptance, then, dare i say it, love.
206
P206-210_LL TEAM.indd 206
www.lloydslist.com
31/01/2014 09:38
Meet the teaM
cRaig eason, technicaL editoR

Twitter: @shiptech
LinkedIn: se.linkedin.com/in/cragson
area of expertise: i am a broadcaster, journalist, writer, researcher, event producer and photographer. i specialise in marine
technology, maritime life, ship operations and seafaring.
What does digital mean to me: With experience in both sailing onboard the industrys key asset, and broadcasting and multimedia,
i hope to bring to life the informed content our subscribers demand. i am particularly interested in multimedia: webcasts, videos or
blogs that focus on the key elements of asset management, asset financing, performance or regulatory compliance.
nigeL LoWRy, gReece coRResPondent

LinkedIn: gr.linkedin.com/pub/nigel-lowry/10/821/519
area of expertise: greek shipping. Profiling. event conceptualisation and organisation.
What does digital mean to me: the digital age offers enriched possibilities for journalists, but also many more choices for
readers. in the new environment, i believe that the best of traditional journalistic virtues are more valuable and more soughtafter than ever.
Liz McMahon, senioR RePoRteR insuRance

Twitter: @LloydslistLiz
LinkedIn: uk.linkedin.com/pub/liz-mcmahon/16/12b/6bb
area of expertise: i cover marine insurance news for the global shipping industry, with a specialisation in maritime security
and piracy.
What does digital mean to me: i am looking forward to being able to build on stories as they develop, allowing for every twist
turn, without being tied to a daily deadline.
aLexandeR Macinnes, RePoRteR us

Twitter: @alex_lloydslist
LinkedIn: www.linkedin.com/pub/alexander-macinnes/31/ab1/a30
area of expertise: My area of expertise is mobile content, having pioneered responsive email within Lloyds List to increase
engagement with our audience. this includes responsibility for the strategy and implementation of our e-coms and website.
What does digital mean to me: With mobile being the biggest growth area for the digital audience it is my aim that that in
2014 the amount of content being produced by Lloyds List that is ready for mobile consumption greatly increases, so that any
subscriber can access the information they need on any device at any time.
www.lloydslist.com
207
31/01/2014 09:38
Meet the teaM
david osLeR, Finance editoR

Twitter: @shippingjourno
LinkedIn: uk.linkedin.com/pub/david-osler/21/888/959
area of expertise: i am a shipping industry commentator, reporter and feature writer, covering business, finance, industrial relations and
regulation in their wider economic and political contexts. My recent specialisation has been ship finance. But in 17 years at Lloyds List i
have acquired in-depth knowledge of all aspects of shipping - including tankers, dry bulk and containerships - and broad familiarity with
Lloyds market insurance, energy, commodities, and world trade.
What does digital mean to me: the move to digital underlines Lloyds Lists ability to stay ahead of the game and is the sort of
innovation that makes parent company informa such an exciting place at which to work.
asia
toM LeandeR, editoR-in-chieF, asia
Twitter: @TomFortLeander
LinkedIn: hk.linkedin.com/pub/tom-leander/4/183/946
area of expertise: dry bulk, particularly capesize ships, general industry reporting across all sectors, analysis and
commentary. Most of my coverage is based in asia, but i periodically coverage us-listed companies and companies based in
the Middle east.
What does digital mean to me: My digital ambition for 2014 is to become active on twitter and join discussion groups on
Linkedin. More broadly, to expand Lloyds Lists social media presence in asia.
Max tingyao Lin, senioR RePoRteR

Twitter: @MaxL_LloydsList
LinkedIn: hk.linkedin.com/pub/max-tingyao-lin/5/793/332
area of expertise: i cover regulations, finances, shipyards and a little bit of everything else in asia.
What does digital mean to me: this year i aim to have 500 twitter followers.
Jing yang, RePoRteR

Twitter: @jingyanghk
LinkedIn: hk.linkedin.com/pub/jing-yang/23/481/335
area of expertise: covering whatever related to shipping and maritime in asia, with special focus on Mainland china.
What does digital mean to me: getting stories out faster without any expense of accuracy and accountability to readers and
story subjects; be more digitally social- im quite social off the grid.
208
www.lloydslist.com
29/01/2014 13:47
Meet the teaM
containeRisation inteRnationaL
Janet PoRteR, editoR-in-chieF, containeRs
Twitter: @JanetPorter_LL
LinkedIn: uk.linkedin.com/pub/janet-porter/3b/b5b/a19
area of expertise: vessels may be slow-steaming, but container shipping is an industry that can change very rapidly, whether
in terms of corporate ownership, trade patterns, vessel sizes, financial results or regulation.
What does digital mean to me: i have monitored these structural developments and market volatility over the years as
containerisation evolved from largely regionally-focused operators and cargo interests to a truly global business, and
welcome the way in which digital products and social media is enabling us to deliver news and insight faster than ever to all
readers, wherever in the world they are located. With 2014 promising to be another year of upheavals, this ability to reach all
stakeholders with the latest developments as quickly as possible is absolutely vital.
RogeR haiLey, editoR, containeRisation inteRnationaL

Twitter: @Rogistics
LinkedIn: uk.linkedin.com/pub/roger-hailey/22/6a2/bb7
area of expertise: as editor of containerisation international i focus on global container ports, container leasing/manufacture,
maritime supply chains and container related it.
What does digital mean to me: ci is building up some powerful data resource on ports and freight forwarders, which will
heighten our already strong web and twitter presence. Personally, i want to expand my twitter profile via @Rogistics - the best
name in the business.
daMian BRett, RePoRteR, containeRisation inteRnationaL

Twitter: @DamianContainer
LinkedIn: uk.linkedin.com/pub/damian-brett/1b/37b/607
area of expertise: i have been writing about the container sector for more than five years and currently cover container
shipping, freight forwarders, ports and terminals.
What does digital mean to me: to provide news as it and happens with graphics and data from Lloyds List intelligence. i also
aim to use social media to further connect with the industry and alert followers to breaking stories before they hit the news
screens.
www.lloydslist.com
209
29/01/2014 13:47
Meet the teaM
PRoduction
JuLian McgRath, digitaL gRaPhics editoR
Twitter: @LloydslistJM
LinkedIn: uk.linkedin.com/in/julianmcgrath
area of expertise: My area of expertise is mobile content, having pioneered responsive email within Lloyds List to increase
engagement with our audience. this includes responsibility for the strategy and implementation of our e-coms and website.
What does digital mean to me: With mobile being the biggest growth area for the digital audience it is my aim that that in
2014 the amount of content being produced by Lloyds List that is ready for mobile consumption greatly increases, so that any
subscriber can access the information they need on any device at any time.
heatheR sWiFt, Layout suB-editoR

Twitter: @LloydsListSwift
LinkedIn: uk.linkedin.com/pub/heather-swift/37/7b8/9b1
area of expertise: sub-editing, design and production of Lloyds List and containerisation international.
What does digital mean to me: i am looking forward to adapting my work to a digital environment and showing that good
design doesnt have to exist on paper
KaRen thoMas, suB-editoR

Twitter: @KarenLloydsList
LinkedIn: uk.linkedin.com/in/karenthomaslloydslist
area of expertise: Poacher turned gamekeeper, having written for and edited business publications in europe and the Middle
east and now subbing other writers copy and posting it online with added links. increasingly, my job will be about making
connections, thinking like a researcher to add online links and position copy on the website in the way that best supports our
readers business analysis needs.
What does digital mean to me: as the Lloyds List team moves from a daily print deadline to a rolling online deadline, the need
to deliver value to the reader, whether we are posting a breaking news story first or presenting a unique piece of data analysis
and to do so quickly, accurately and with flair is likely to become more, not less, of a challenge. im here to learn.
FRed WiLLiaMs, suB-editoR

Twitter:
LinkedIn: uk.linkedin.com/pub/fred-williams/53/b67/477
area of expertise: i help stories to be projected well. that means making sure the reporters english meets a high standard of
grammar, spelling and comprehension and spotting obvious mistakes. i add value to a story with hyperlinks to further reading
and related articles and sell the story with a strong, clear headline and decent picture.
What does digital mean to me: the digital future raises the question of how to engage with the reader better, since on the
web the reader can talk back to you much more directly than as a print customer. Maybe thats the best thing about the digital
future; its a live performance.
210
www.lloydslist.com
29/01/2014 13:47
CLASSIFIED
Representaciones Maritimas S.A. de C.V.

Frontera 67, Col. Tizapan San Angel
Deleg. Alvaro Obregn
01090, Mxico, D.F.
Mxico
PO Box 20 / 107
Telfono: (52) 55 50 89 22 22
Fax: (52) 55 50 89 22 80 / 81
repmar@maritimex.com.mx
www.maritimex.com.mx
ILAN ORLY & CO. LAW OFFICES

23 Menahem Begin Road, Tel Aviv 66184, Israel
Tel: +972-3-5663313 Fax: +972-3-5663314 Mobile: +972-52-5663313
www.maritimelaw.co.il E-mail: ilanorly@maritimelaw.co.il
Marint (Offshore Services) Ltd

Tel: +44 (0)20 8398 9833 (24hrs)
Fax: +44 (0)20 8398 1618
Email: tugs@marint.co.uk
Web: www.marint.co.uk
MARINT (OFFSHORE SERVICES) LTD as truly independent ISO:9001:2008 compliant towage & salvage brokers and consultants have been assisting ship owners, ship managers, insurance brokers,
P&I clubs, and underwriters, worldwide, with their casualty requirements for over 25 years. Marint through their international network, source suitable vessels, additional equipment plus personnel, as
required in order to provide the client with an economic and safe solution, 24 hours a day and on behalf of our principals, we have successfully negotiated and overseen operations both large and small.
MARINT (OFFSHORE SERVICES) LTD and their subsidiary MARINT OFFSHORE PTE LTD (Singapore) are active in the oil and gas markets, working with clients to source suitable offshore
support vessels of all types to assist with their exploration and production programmes, with special emphasis on the towage, installation and support of Floating Production units.
www.lloydslist.com
CLASSIFIED.indd 211
211
30/01/2014 12:06:41
CLASSIFIED
For any trouble at sea call VERNICOS +30 210 429 2201
We manage the biggest and most powerful fleet of
tugs in the Eastern Mediterranean
35-39 Akti Miaouli,185 35 Piraeus, GREECE
Tel: +30 210 429 2201 Fax: +30 210 429 2200
Email: tugs@vernicos-argonaftis.gr
Web: www.vernicostugs.gr / www.argonaftistugs.gr
Committed to safe, secure, environmentally sound,

efficient and sustainable shipping
Over 30 years experience in LPGs and Oil / Chemical Tankers management and transportation
Certified in accordance with ISM code, ISO 9001:2008, ISO 14001:2004, OHSAS 18001:2007,
ISO 50001:2011, ILO 2006.
CONSOLIDATED MARINE MANAGEMENT Inc.

a LATSCO SHIPPInG LIMITEd company
1-3 Igias & Akti Themistokleous Str. 185 36 Piraeus Greece
Tel: +30 210 4595100, Fax: +30 210 4287334 /5, Email: cmm@cmm.gr Web: www.cmm.gr
Call us at +61 2 8270 7300.

We are available 24 hours a day, 365 days a year.
Australia Bunkering Pty Ltd.
Level 6 Suite 604
50 Clarence Street
SYDNEY NSW 2000
Tel.: +61 2 8270 7300
Fax: + 61 2 8270 7388
E-mail: bunker@ausbunk.com
PREMIUM QUALITY AND SERVICE IN MARINE FUELS AND LUBRICANTS
Pursuing Excellence
Through Commitment
Tel: +30 210 6194100
www.product-shipping.com
Aethrion Center 40, Ag. Konstantinou Str. Maroussi, Athens Hellas, 151 24
212
CLASSIFIED.indd 212
www.lloydslist.com
30/01/2014 12:06:41
CLASSIFIED
Mr. Peter Jiang

C&M Commercial and Maritime Law Offices
eml: cmlo@cmlo.com.cn
Tel: 021-6878 1965 Fax: 021-6878 1917
Add: Suite 1712, No. 710 Dongfang Rd.,
Shanghai, P.C.: 200122, China
www.cmlo.com.cn
www.sinosino.com
Head Office
Rua Consiglieri Pedroso n430
P.O.BOX 888
Maputo /Mozambique
Telf: +258 21 431022/5, +258 21 321440

Fax: +258 21 305 263, +258 21 300137
e-mail: operations@mocargo.com
Web: http//www.mocargo.com
``Mocargo all the difference on transport and logistics``
www.lloydslist.com
CLASSIFIED.indd 213
HODEIDAH SHIPPING AND TRANSPORT CO. (SYC)
Address:
Kilo 7,
Sanaa Street,
P.O Box 3337,
Hodeidah, Republic of Yemen
Phone: 00967 3 228849 / 228554

Fax: 00967 3 228542
Email: lloydsagency@hodship.net
Aden Office: lloydsagency.ade@hodship.net
GUR, established by its founding partner Mr. Tevfik GR in 1984, is one of the leading Turkish law firms which has
different departments including Shipping and provides a wide range of legal services tailored to its clients needs and has
numerous local and international clients in various sectors.
GUR is committed to offering the highest quality representation to its clients. GURs solution-oriented attorneys provide
clear, precise and pragmatic advice, always with the clients best interests in mind. GUR aims to establish long-term
relationships with each of its clients based on mutual trust and understanding. GURs aim is to add value to our clients
businesses byproviding excellent legal advice and representation.
GUR greatly values its clients and regards them as its long-term friends.
GUR LAW FIRM
Smbl Sok. No:61
34330 Levent / Istanbul / TURKEY
Tel : +90 212 325 9020

Fax : +90 212 325 9023
www.gurlaw.com
213
30/01/2014 12:06:42
CLASSIFIED
Bureau Veritas Quality International Hellas S.A.

Address: Etolikou 23, Piraeus 185 45, Greece
Phone:+30 21 0406 3000
Ofce: +31 (0)10 - 425 02 40
WWW.RC-INSPECTION.COM
manon.roskam@rc-inspection.com
Modern operating, professional inspection company.

Highly experienced eld experts operating around the globe.
RC Inspection
The industrys finest and the most economical crewThe industrys finest and the most economical crew
Unbeaten turnaround times for sampling and analysis.
hand-picked and professionally managed.
todays crew
management
industry
ship owners and managers have many
Metals | Minerals | Ores | Ferrous Scrap | Non Ferrous ScrapThe
| Coal
|In Coke
| Pet
Coke
| most
Anthracite
industrys
finest
and
the
economical crew
choices. Top notch marine human resources, cost efficient services, and
In todays crew management industry ship owners and managers have many
hand-picked
and professionally
specialized management
by professionals at managed. makes the
choices. Top notch marine human resources, cost efficient services, and
choice easier.
In todays
crewthe
management industry ship owners and managers have many
specialized management by professionals at
makes
choices.
Top
notch
marine human
resources,
cost efficient services, and
Contact
us for a quotation
choice easier.
The industrys finest and the most economical

crew
specialized
management by professionals
at MARINE MANAGEMENT
makes the
MERCANTILE
The industrys finest and the most economical crew
108 Aluthmawatha Road, Colombo 15, Sri Lanka
choice easier.
T
:
+94
(11)
448
9900
F
:
+94
(11)
448
9999
E: info@mercmarine.net
Contact us for a quotation

In todays crew management industry ship owners and managers have many
In todays crew
management
industry ship owners and managers have many
MERCANTILE
MARINE
choices. Top
notch marine
humanMANAGEMENT
resources, cost efficient services, and
choices. Top
notch
marine
human
resources,
costLanka
efficient services, and
108 Aluthmawatha Road, Colombo
15, Sri
specialized management by professionals at
makes the
: +94 (11) 448by9900
F : +94 (11)
specializedTmanagement
professionals
at 448 9999
makes the
choice easier.
choice easier.
MERCANTILE MARINE MANAGEMENT

108 Aluthmawatha Road, Colombo 15, Sri Lanka
T : +94 (11) 448 9900 F : +94 (11) 448 9999

MERCANTILE MARINE MANAGEMENT
MERCANTILE
MARINE
108 Aluthmawatha
Road,MANAGEMENT
Colombo 15, Sri Lanka
Aluthmawatha
Road,
15, Sri
Lanka
T108
: +94
(11) 448 9900
F :Colombo
+94 (11) 448
9999
T
:
+94
(11)
448
9900
F
:
E: info@mercmarine.net +94 (11) 448 9999
Shipping forecast:
Humber, west gale 8 or

severe gale 9, expected soon...
Hiscox, good (never moderate)
214
CLASSIFIED.indd 214
hiscoxgroup.com
www.lloydslist.com
30/01/2014 12:06:42
CLASSIFIED
DM Shipping Co., Ltd

U-dong, Byusan e Centum-Classone 2-cha
1211, 71, Centumdong-ro, Haeungdae-gu,
Busan, Korea 612-020
Tel: +82 51413 7740
Email: dm@shipping.co.kr
P. O. Box 800, Lucas Street, St. Georges, GRENADA

Telephone: +1 473 440 3578 Fax: +1 473 440 4172
E-mail: wilkinson@spiceisle.com
Web: www.wilkinsonchambers.net
El Reedy Shipping Company
Ship Agents
Ship Owners l Shipping Agents l Ship Chandlers l Marine Contractors
+390809900116\7\8
Spamat@spamat.it
CLASSIFIED.indd 215
Barristers, Solicitors, Conveyancers, Patents and Trademark

Agents and Notaries Public
SPAMAT SNC
Corso Antonio de Tullio
Bari, Italy 70122
www.lloydslist.com
Wilkinson
WILKINSON & WILKINSON
51 Villa No.12 Ras El Bar Damietta EGYPT

Tel: +2 057 2526568
Fax+2 057 2529852
Email: elreedy@elreedyshipping.com
Web: www.elreedy-shipping.com
215
30/01/2014 12:06:44
CLASSIFIED
Translogistics LLC
GENERAL TRANSPORT SERVICES
GENERAL TRANSPORT SERVICES

Marine and Cargo Surveyors
Marine and Cargo Surveyors
P.O.Box 81, Republic of Djibouti

GTS / GSK Group
Tel: +253 21 34 01 18 & +253 21 34 38 35
Email: GTS.Djibouti@gsk-group.com
Off. 76, Verkhneportovaya St, Vladivostok,

Russia 690003
Tel: +7-423-251-1047
Fax: 7-423-251-1056
PIC: Mr. Ilya Zaytsev

e-mail: om@tl-ru.com
www.translogistics.ru
MAEI & PARTNERS LLC

MIROLJUB MAEI
Senior partner
P.O.Box 366, Pod Katelom 4, Rijeka, 51000, Croatia
Tel: +385 51 215 010, email: macesic@macesic.hr
AL-Rashad Supply and Marine

Services Corp was established in 1974
to be one of the leading marine agents,
Transportation and Heavy Equipment
Operators in the state of Kuwait.
P O Box 25048, Safat, Kuwait, 13111
Office Tel: +(965) 22468097/22468098
/22423642
Office Fax: +(965) 22426140/22414638
Email: ops@alrashadmarine.com
Website: www.alrashadmarine.com
KEN LEE SHIPCHANDLER
The Leading Ship Supplier with over 40 years of service excellence

KL HOUSE
MOTORWAY M3
RICHE TERRE
MAURITIUS
Tel
: +230 249 1818
Fax
: +230 249 3838
Email : klchandler@intnet.mu
216
CLASSIFIED.indd 216
Handling of vessels of all classes, carrying bulk,

bulk liquid, general cargo and ro-ro
Container freight forwarding
Mobile: +98 912 72 73 701
Web Site : www.bpgp.net
Tel: +98 21 88870569

Fax: +98 21 88870568
Integrated Marine Maintenance

Correntin Ebengke Ntang
Purchasing and Sales
B.P 7274 Douala, Cameroon,

Tel: +237 7637 1655
email: integratedmarinemaintenance@gmail.com
United Kingdom
Maritime Pilots
Association
Don Cockrill
Chairman
UNITE House, 128 Theobalds Rd,
London, WC1X 8TN, UK
ukmpaoffice@yahoo.com
www.ukmpa.org
www.lloydslist.com
30/01/2014 12:06:44
CLASSIFIED
The Nippon Salvage Company, Limited

With our long history and rich experiences, we can cope with any type of marine casualty.
To maintain our balanced system including both hardware and software, we improve continuously our own resources such as personnel, salvage craft and equipment.
We are a member of the International Salvage Union (ISU) and are part of its Executive Committee.
Through our network with salvors around the world, we can provide the best solution timely, accurately and sincerely in any emergency even in the remotest areas of
the world.
5-1, Ohmorikita 1-chome, Ohta-ku, Tokyo, Japan
and
rn Europe to
All container types catered for
Congratulations to Lloyds List on nearly 300 years of

maritime news coverage and best wishes for your digital future.
Our ultra-modern fleet offers a weekly, fast and reliable service between
Europe and all major Turkish, Mediterranean & North African ports
Winner
All container types catered for.

Tel: 01394 612920
Email: turkonukmarketing@turkon.co.uk
Website: www.turkon.co.uk
Totally briefed.
Every day.
When time is precious, we know it is vital for you to have an instant
snapshot of the important stories shaping the maritime world on a daily
basis. Our new Daily Briefing gives you just that. Developed in response to
customer feedback, our global team of journalists will make sure that you get
an instant and informed picture of whats important and likely to shape the
decisions you need to make.
Check out preview.lloydslist.com/daily-briefing for yourself.
Our client services team are on hand to help with any questions you may have.
Call them on +44 (0)20 3377 3996 or email clientservices@informa.com
www.lloydslist.com
CLASSIFIED.indd 217
217
30/01/2014 12:06:45
www.lloydslist.com

Lloy'd List The Future of Shipping

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Lloy'd List The Future of Shipping

Uploaded by

Copyright:

Available Formats

The future of shipping since 1734

The future of shipping since 1734

Publisher: Nicola Whyke

Main Tel: +44 (0) 207 887 2699

0253_17-10_PGI Advert A4_Without Address_AW.indd 1

Preface Frank Coles, president, Inmarsat

Lloyds List Timeline

Shipping markets, cycles and maritime information 1734-2013 Martin Stopford

Old versus new, part one Jim Davis

Old versus new, part two Birgit M Liodden

Manning problems some things never change Michael Grey

The Flying Angel story Dr Ken Peters

The generation game Richard Meade

Advising the next generation Dr Sadam Kaptanoglu

The top 10 most influential people in shipping

Ten steps towards a better industry Roberto Giorgi

Everything must change to stay the same Richard Sadler

The secret of success in shipping Harry Vafias

WISTA-UK: a journey of four decades Maria Dixon

Greeks long voyage to blue-chip status Nigel Lowry

From East to West and back Liz McMahon

Changing times Roger Hailey

Shipmanagement and the quest for quality Tom Leander

For China shipping, a generational shift Tom Leander

Containers and global trade Maersk Line

TEU the one true global standard Janet Porter

Containers and trade Damian Brett

More than a commodity Flemming R Jacobs

turning threats to opportunity Katharina stanzel

A big crisis leads to big reforms Li shaode

Unusual definitions the Institute of chartered shipbrokers

trading places Jeremy Penn

tracking the historic rise of Asian shipping tom Leander

coMMUnIcAtIon At seA | sponsored by Inmarsat

InnoVAtIon & tecHnoLoGY | sponsored by ABS

the top 10 innovations to influence shipping craig eason

Welded freighters that succeeded in war and peace nigel Lowry

A class apart Dimitris Melissanidis

enVIRonMent | sponsored by GMs

strength and Diversity Felicity Landon

shipping, the environment and sustainability craig eason

Aspire and achieve Rakesh Khetan (Billu)

Five must-haves for the future - Dr Grahaeme Henderson

Future Proof shipping

sHIPYARDs | sponsored by Keppel

RIsK & InsURAnce | sponsored by Holman Fenwick Willan

Bigger ships, bigger risks Liz McMahon

Insurance is the lifeblood of shipping simon stonehouse

Managing risk Michael Kingston

twenty-first century law firm with Victorian roots David osler

casualties christopher Munro

Lloyds List: the ability to adapt Dr Richard Ward

secURItY | sponsored by Protection Group International

cyber risks are growing Liz McMahon

the changing face of security Liz McMahon

the changing face of finance Prof costas Grammenos

A life in shipping Jeffrey sterling

the future of ship finance Alex McInnes

Audit is the platform for eY Greece David osler

capital markets and their transformation nicholas Bornozis

Accelerating change Harry theochari

Meet tHe teAM

By Koji Sekimizu, secretary-general,