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INTERCARGO International Association of Dry Cargo Shipowners

INTERCARGO International Association of Dry Cargo Shipowners. Presentation to The Institute of Chartered Shipbrokers 25 th October, 2006 by Roger Holt Secretary General. INTERCARGO. Industry Structure and some Issues for Discussion. INTERCARGO. Agenda. Intercargo

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INTERCARGO International Association of Dry Cargo Shipowners

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  1. INTERCARGO International Association of Dry Cargo Shipowners Presentation to The Institute of Chartered Shipbrokers 25th October, 2006 by Roger Holt Secretary General

  2. INTERCARGO Industry Structure and some Issues for Discussion

  3. INTERCARGO Agenda • Intercargo • The Round Table of international shipping • associations • The Regulator and Rule Maker • The Regulated • The Enforcer • The Information Providers • Bulk Carrier Casualty Data • Specific Dry Bulk Issues

  4. INTERCARGO • The International Association of Dry Cargo Shipowners • Representation of Bulk Carrier Owner/Operator interests • Direct entry organisation • Specialising in Bulk Carrier issues • - Promotion of Safety, Quality, Efficiency and Profitability

  5. INTERCARGO • 120 Full and Associate Members • 900 bulk carriers over 10,000 dwt • Inclusive of Operators as full members

  6. 1 INTERCARGO The Round Table of international shipping associations

  7. INTERCARGO Background: • BIMCO, International Chamber of Shipping, Intertanko and Intercargo • Established 1998 • Probably covers about 90% of the world’s tonnage • Designed to improve efficiency, identify major issues, be more effective with the regulator, prevent surprises, enhance cooperation

  8. INTERCARGO • Typical issues: • Tripartite Dialogue – 5th annual meeting in • Seoul in September • Dialogue with the Asia Shipowners Forum • Dialogue on Piracy – Malacca Straits • Industry Code on Recycling • Industry Guidelines on Flag State • Performance • However, recognition that each Association is answerable to its own management

  9. 1 INTERCARGO The Regulator and Rule Maker

  10. INTERCARGO • IMO • National Administrations • Regional Administrations • State Legislation • Classification Societies • Flag States • Port States There is conflict between a number of these authorities e.g. EU SSP The Regulation of Shipping

  11. IMO Conventions and Protocols INTERCARGO • Safety prime importance – SOLAS, maritime traffic, load lines, carriage of dangerous goods, etc • Pollution – MARPOL 73/78 • Liability conventions • International Mobile Satellite Organization (1970) • Global Maritime Distress and Safety System (1999) • Standards of Training, Certification and Watchkeeping (1978) In total, around 40 Conventions and Protocols have been adopted.

  12. INTERCARGO Sample of regulatory topics • IACS/Common Structural Rules • IMO/Goal Based Standards • MARPOL/Annex V • MARPOL/Annex VI • EU/Competition Law

  13. INTERCARGO IACS/Common Structural Rules • IACS Council decision June 2003 • JTP for double hull tankers, L>150m • JBP for SSS + DSS bulk carriers, L>90m • Develop industry standards for common classification rules • In force from 1st April 2006 for all ships contracted after • that date • Designed to remove competition between classification • societies based on interpretation of the Rules.

  14. INTERCARGO IMO/Goal Based Standards • IMO Assembly December 2003 adopted Resolution on Strategic • Plan for the Organisation • Goal Based Standards for the design and construction of • New Ships • Tier Concept, I-V as follows: • Safety Objectives, Functional Requirements, Verification of • Compliance, Class Rules (CSRs), Code of Practice for • Construction, Maintenance and Operation • Prescriptive Approach versus Safety Level Approach

  15. INTERCARGO MARPOL/Annex V • December 1988. Garbage record book April 2004 • Disposal >12nm from land. Not in special areas (8) • Port reception facilities? • Green Petcoke – use of detergent • Water washing – MEPC55 • See: BIMCO Hold Cleaning/Residue Disposal Clause • for T/C Parties

  16. MARPOL/Annex VI INTERCARGO • Air Pollution Prevention – SOx, NOx, CO2 plus Particulate Matter • Adopted 1997 • 4.5% global cap with effect from 19 May 2005 • First Sulphur Emissions Control Area (SECA) effective 19 May 2006 • Vessels required to use 1.5% S fuel in the Baltic Sea Intersessional meeting in Oslo in November will debate this topic vigorously to decide how to move forward.

  17. EU Bunker Regulation INTERCARGO • EC directive 1999/32 • Currently 0.2% S for distillate fuels (reducing to 0.1% S from 1 Jan 2008) • Proposed Amendments • 1.5% sulphur limit in the Baltic Sea and for passenger vessels from 19 May 2006 or 12 months after the entry into force of the directive, whichever is the latest. • A 1.5% sulphur limit North Sea – 12 months after adoption by IMO • A 0.1% sulphur limit for ships at berth and for inland vessels from 1 January 2010, with two year exception for 16 unifuel ferries in Greece

  18. Suppliers Bunker Delivery Note INTERCARGO • Name and IMO number of the receiving ship • Port • Date of commencement of delivery • Name, address and telephone number of marine fuel oil supplier • Product name(s)

  19. Suppliers Bunker Delivery Note INTERCARGO • Quantity (metric tonnes) • Density at 15°C (kg/m3) • Sulphur content (%m/m) • A declaration signed and certified by the fuel oil suppliers representative that the fuel oil supplied is in conformity with the regulations.

  20. INTERCARGO EU/Competition Law • Regulation 4056/86 exempted tramp + liner shipping • Change in EU law 18 October 2006 – deletion of • exemption • Cartels, Abuse of dominant position and Pools • Industry subject to scrutiny • Low awareness – Owners need guidance • Punitive fines – 10% of worldwide turnover • Any Pool trading with Europe should take legal advice

  21. Increased Hatch Cover Loads Approved Mooring & Towing Equipment (New: 1 Jan 2007) Air Pollution Prevention* (Ships of Parties) Free-fallLife boat(100% Capacity at stern) New: 1 July 2006 Hatch Cover & Securing Arrangement Immersion Suits* (for ea. person + extra) Min Reserve Buoyancy and Increased Bow Ht Life Rafts (100% Capacity / Side) New: 1 July 2006 Bunker Tank Protection (New: 1 Aug 2007) Loading Restrictions(At >90% Dwt) Permanent Means of Access Water Ingress Detection and Pumping Arrangement* Foredeck Fittings* Side Shell Frame Reassessment Bulk Carriers - IMO & IACS Requirements INTERCARGO • Requirements have come into force affecting new and/or existing Bulk Carriers • Focus is to enhance the hull watertight / weathertight integrity, to provide flooding protection & detection, and to protect seafarers Source: ABS

  22. The Regulated INTERCARGO

  23. INTERCARGO Who are we talking about ? • The owner • The disponent owner (Annex V, Annex VI) • The manager (ISM, ILO) • Flag State (Voluntary audit) • Ports (Port Reception facilities) • Terminals (BLU Code) • Port State (Res.882(12)) The net is wider than you may think – Charterers need to be aware!

  24. The Enforcers INTERCARGO

  25. INTERCARGO • We are talking about any body with authority for inspection which can gain access to the ship and her records, typically: • Cargo interests – P&I Club, pre-loading • inspections for cleanliness, hatch cover testing • Class inspections • Port State Control inspections • Flag state – statutory inspections

  26. INTERCARGO Port State Control • Visiting ships must meet international safety and pollution • prevention standards • Applicable to Conventions which have entered into force • Equivalent standards to be applied where a Flag State has not • ratified a convention – ‘no more favourable treatment’ • Domestic and national laws apply to foreign ships e.g. OPA 90 • Started with 8 North Sea States in 1978 – information exchange • Paris MOU established with 14 EU States in 1982 • MOUs currently in operation: • Paris, Tokyo, Mediterranean, Caribbean, Vina del Mar, Indian • Ocean, Black Sea and West + Central Africa plusUS Coast Guard • (not an MOU)

  27. The Information Providers INTERCARGO

  28. INTERCARGO • There are 2 main providers of information to indicate the quality of a ship: • Equasis (as per Intertanko presentation) • Rightship (an on-line vetting system) • Both should be used by Charterers to ensure that the detention record and the overall quality of the ship is satisfactory. Quality Owners need a level playing field.

  29. Rightship • Independent Company Oct 2001 • S/H BHPBilliton, Rio Tinto & Cargill (June 2006) • Ship vetting focus • Dry cargo & Petroleum Vetting Service • Petroleum Vetting System development • Dedicated vetting specialists • Customers globally • Both Shareholders • 55 External • ISO 9001 • Proven system 29

  30. Impact of Cargill Integration

  31. Rightship - Vetting System • One to Five Star rating system • 3 to 5 Star vessels - User Approved • 2 and 1 Star referred to Rightship for recommendation • Calculated Risk ranking • Each customer sees only his own commercial activities ( vetting ) • Share non commercial, Safety and Quality related information • System applies customer rules and requirements to their Vetting Policy • Vessel Inspection results shared with all users • Loading / Discharge Terminal reports

  32. INTERCARGO Bulk Carrier Casualty Data

  33. INTERCARGO Bulk Carrier Casualty Report, 2005 • Summary and trends: • 6 total losses: • - 1 x Handymax 1 x Collision • - 5 x Handysize 3 x Groundings • 1 x Collision • 1 x Structural Failure • Average age 24 years (world fleet >10,000dwt, av. • 14.76 years) • 8 crew members lost their lives • 0.16 mill dwt lost out of total 340 mill dwt • (>10,000dwt)

  34. Number of Bulk Carrier Losses 1996 - 2005 20 18 16 14 12 10 No. of Losses 8 6 4 2 0 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 Year Total number of losses Number of losses by structural failure

  35. INTERCARGO Analysis of Total Losses, 1996-2005 • 96 bulk carriers >10,000dwt lost, or 9.6 ships a year • Average 37 deaths per year • Average age, 21.11 years • Average 402,514 dwt per year • BUT • ‘Alexandros T’ has been tragically lost during 2006 with • the loss of 26 crew members. • ‘Setsuyo Star’ was a near miss – also off S.Africa • Total Losses in 2006: 6 ships + 37 lives

  36. INTERCARGO Specific Dry Bulk Issues

  37. INTERCARGO Two topics for discussion today: • Capesize loading of Iron Ore in Brazil • DRI Fines/HBI

  38. INTERCARGO Capesize loading of Iron Ore in Brazil • Rider Clauses from a recent C/P: • ‘Cargo to be loaded/stowed/trimmed and discharged by Charterers or their Agents free of all risk, liability, expense whatsoever to Owners/vessel always in accordance with IMO and/or local regulations/recommendations’ • 2) ‘Unless otherwise instructed by Shippers, Master or Owners shall undertake that vessel be presented for berthing with minimum ballast compatible with vessel’s seaworthiness’

  39. INTERCARGO 3) ‘Loading rate to be 40 hours for vessel loading up to 120,000 metric tons, plus one hour for every 5,000 metric tons thereafter ………..’ Rather different from 16,000 mt/hr as suggested by CVRD 4) ‘The stoppage caused by adjusting ballast (or deballasting) shall not count as laytime.’ Deballasting is a perfectly normal and necessary part of the operation and should count towards used laytime

  40. INTERCARGO Now, please look at the CVRD instructions to Master (handout). There is clearly conflict between these instructions and the C/P Rider Clauses. In addition, there is a possibility that ships may be unseaworthy when they transit from the anchorage to alongside the berth and there can be a 2m swell running. An IACS classification society is assisting us to establish if ships are operating outside their safety envelope and what happens to the bending moment and shear forces when loading commences with minimal ballast on board.

  41. INTERCARGO In the same C/P we have the following: ‘Carrying vessel shall sail and arrive at the port of discharging within the normal and reasonable period of time. Any unreasonable deviations or delays are not allowed. The Owners should endeavour to arrange the vessel to reach the first discharging port within the time theCharterers expected.’ Suggest refer to new BIMCO Clause: Weather Routeing Clause for T/C Parties www.bimco.org

  42. INTERCARGO DRI Fines/HBI What is the problem? About 10.0 mill mt is exported annually, most of which arrives safely at the discharge port. But not all …….. There have been 3 major incidents with this cargo in the last 7 years: Karteria, 34.900 dwt exploded 25/08/99 – 2 crew dead Adamandas, 22,580 dwt high heat 21/09/03 – scuttled Ythan, 35,310 dwt exploded 28/02/04 – 6 crew dead

  43. INTERCARGO Process: • Direct Reduced Iron: Iron Ore (Iron Oxide) reduced by the removal • of oxygen to produce a metallic product in pellet form • DRI pellets are very porous and are prone to re-oxidation • Re-oxidation occurs by the application of heat or by contact with • water • In contact with water, DRI reverts back to Iron Oxide by absorbing • oxygen and releasing hydrogen • Re-oxidation occurs quicker with seawater • Forms of DRI: • Pellets, 6 to 25 mm dia and up to 5% fines (<4 mm particle size) • Cold Moulded Briquettes, fines compressed <650degC • Hot Moulded Briquettes, fines compressed >650degC • HBI oxidizes very slowly and is relatively safe with low fines

  44. INTERCARGO • In conclusion: • HBI < 5% Fines is probably safe for carriage in bulk as per advice given in the BC Code • DRI Fines and Cold Moulded Briquettes < 5% Fines may be safe for carriage in bulk as per advice given in the BC Code • DRI Fines >5% Fines and temp > 65degC is not safe for carriage in bulk in a conventional bulk carrier What are we doing about it? Working with Flag States (Marshall Islands) in the WG at DSC to achieve a practical solution to the problem and warning our Members of the dangers – certain grades of this cargo should not be shipped other than in an OBO!

  45. INTERCARGO INTERNATIONAL ASSOCIATION OF DRY CARGO SHIPOWNERS Thank you

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