bulk carrier update no. 1 2010

DNV Bulk Carrier UpdateInformation from DNV to the bulk carrier industry No. 1 June 2010

FOCUS ONGREECEAlso inside:� Samos Steamship Co.� Eastern Mediterranean Maritime Ltd.� Golden Union Shipping Co.� Nicky Pappadakis, Intercargo Chairman� Grain trade

Samos Steamship Co. Eastern Mediterranean Maritime Ltd. Golden Union Shipping Co.

CONTENTS

2 | DNV BULK CARRIER UPDATE NO. 1 2010

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DNV Bulk Carrier Update

is a newsletter published by Det Norske Veritas, DNV Maritime.

It is distributed to DNV customers and stations worldwide.

© Det Norske Veritas AS

Please direct any enquiries to your nearest DNV station or

Bulk Carrier Update e-mail: [email protected]

Editorial committee:

Michael Aasland, Business Director, Bulk Carriers

Editor: Magne A. Røe

Production: Cecilie Johansen

Design and layout: Coor Graphic Services 1004-032

On-line edition of DNV Bulk Carrier Update:

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An updated list of all regional offices can be seen on DNV’s website:

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WE WELCOME YOUR THOUGHTS!

64 8

DNV Bulk Carrier Update

SAMOS STEAMSHIP CO. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4

EASTERN MEDITERRANEAN MARITIME LTD. . . . . . . . . . 6

GOLDEN UNION SHIPPING CO. . . . . . . . . . . . . . . . . . . . . . 8

NICKY PAPPADAKIS, INTERCARGO CHAIRMAN . . . . . . . 10

PROFILING DNV GREECE . . . . . . . . . . . . . . . . . . . . . . . . . . 12

DNV RESEARCH & INNOVATION PIRAEUS . . . . . . . . . . . 14

STRUCTURAL CHANGES IN THE GRAIN MARKET . . . . 16

DEVELOPMENTS IN THE GRAIN MARKET. . . . . . . . . . . . 18

GRAIN LOADING AND STABILITY . . . . . . . . . . . . . . . . . . . 20

FITNESS FOR CARGO . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21

CLOSE-UP INSPECTION REQUIREMENT . . . . . . . . . . . . . 22

EMERGENCY TOWING BOOKLET . . . . . . . . . . . . . . . . . . . 24

EXPERIENCES WITH LOW SULPHUR

IN EUROPEAN PORTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25

THE NEW IMSBC CODE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28

HATCH COVER MAINTENANCE . . . . . . . . . . . . . . . . . . . . 32

BETTER THAN EXPECTED . . . . . . . . . . . . . . . . . . . . . . . . . 35

MARKET DECOUPLING FOR DRY BULK VESSEL SIZES? 36

Photos: Front cover ©Getty Images, p4 ©Samos SteamshipCo., p5–6 ©Raymon Matera, p7 ©Eastern MediterraneanMaritime Ltd, p8 ©Raymon Matera, p9 ©Golden Union, p11©Intercargo, p12 ©DNV/Magne A. Røe, p14 ©DNV/GeorgiosTeriakidis, p16 ©DNV/Magne A. Røe, p23 ©NAEGA,p29–31©DNV, p33, 35, 38 ©DNV/Magne A. RøeBack cover: ©DNV/Nikolaos A. Vogiatzis

Michael Aasland

Business Director,

Bulk Carriers

[email protected]

EDITORIAL

DNV BULK CARRIER UPDATE NO. 1 2010 | 3

FOCUS ON GREECE

There is a lot of activity onthe bulk carrier scene thesedays – much more thanmany of us predicted a yearago. In DNV, we see veryhigh levels of activity interms of specification re-views carried out for ownersas well as enquiries to yards.We have also received aconsiderable number ofnew orders for Bulk Carri-ers with DNV class so farthis year.

Greece’s shipping commu-nity has played a very signifi-cant role in the bulk carrier

market for many years andGreek companies have alsobeen extremely active in thislast wave of orders, withGreek shipowners placingmore orders than any othernation. It is thus natural thatthis issue of DNV Bulk Car-rier Update should focus onGreek shipping.

We therefore bring you in-terviews with Mr Inglessis ofSamos Steamship, Mr Tson-akis of Eastern Mediter-ranean Maritime and MrGabriel of Golden UnionShipping, as well as a por-

trait interview with Inter-cargo chairman Nicky Pap-padakis.

Grain is probably one of theoldest of the dry cargoes. Ithas been shipped since an-cient times – especially inthe Mediterranean. Grain isstill a significant cargo, withshipment volumes exceed-ing 10% of the total drycargo shipped during thelast decade. Furthermore,we see that grain shipmentsmay increase due to thegreater demand for biofuels.In this issue, we also focus

on the grain shipment busi-ness, from both a marketand technical point of view.The articles cover a broadrange of issues, from stabilityto hatch covers, as well asproviding insight into thegrain market.

We also bring you an updateon the new IMSBC Code aswell as the latest on the LowSulphur fuels.

I hope you enjoy readingthis issue of DNV Bulk Carrier Update!

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This is an artist’s impression of the recently delivered Corella Arrow from the DNV 2010 Calendar. Owner: Glory Ocean Shipping S.A., type: General Cargo (single deck),

flag: Bahamas, yard: Oshima Shipbuilding Co., Ltd., year built: 2009, Loa: 225.00 m, B: 32.26 m, D: 20.56 m.

CLASS NOTATIONS: �1A1 General Cargo Carrier HC-A E0 IB(+) BIS HOLDS(2,5,7)MAY BE EMPTY TMON NAUTICUS(Newbuilding)

Samos Steamship Co.

Quality and attention to detailThe history of Samos Steamship Co. in many ways parallels the history of modern Greek shipping. The island of Samos, the original home of the Inglessis family who

founded Samos Steamship Co., is well known for its seafaring traditions.

TEXT: RAYMOND MATERA

In 1875, the Inglessis familybegan trading goods fromthe island using a small fleetof sailing ships. By 1911, thefamily had purchased its firststeamship, transporting wineproduced on the island toFrance. Following WWII, dur-ing which the family lost itsentire fleet, the Inglessis fam-ily, like many other Greekshipping companies, pur-chased several Liberty shipsfrom the United States andentered the modern era. Offices were set up in Londonunder the Pegasus Ocean Services Company.In the 1960s and 1970s, it was time to establish a mod-

ern fleet and the family company commissioned newbuildsfrom Japanese shipyards. By 1991, Samos Steamship Co.was established in Piraeus, with a sister office in London,and it has built on its strengths ever since. Working withmostly second-hand OBOs in the 1990s, Samos SteamshipCo. took advantage of this flexibility to switch between oreand oil depending on the market. The company createdits current fleet with an ambitious newbuild programmethat began in 2001, continuing its successful relationshipwith Japan’s shipyards. “The quality of Japanese ships isvery good, they are designed well, economical to operateand have an attention to detail, something we appreciate,”says Nicholas G. Inglessis, a director of Samos SteamshipCo.

THE SAMOS STEAMSHIP CO. FLEET, which is approach-ing 20 vessels of more than 1.8 million DWT, split 50/50between bulk carriers and tankers, is quite new, with fivenewbuilds ready for delivery between 2010 and 2012. Twolarge Capesize ships work the Far East while the smaller

vessels trade in both the Eastand West.

QUALITY and attention todetail also characterise SamosSteamship Co.’s approach tobusiness. According to Mr In-glessis, “We have our own of-fices in Russia to train ourcrews, where we offer asmuch support as possible.This keeps our retention ratevery high, something we areextremely proud of. We are

constantly training in every area, whether it be navigation,systems or safety, since this is a core principle of shippingtoday.”The financial crisis has impacted Samos Steamship Co.

by requiring the company to rely less on tight credit andmore on its own resources. “However,” says Mr Inglessis,“we are fortunate to be an established and traditional com-pany, with a good name, so that banks come to us. In addi-tion, knowing how markets can change, we have been con-servative and have some ships on long-term charters.” At the heart of the company are human relationships.

Says Mr Inglessis: “We have office staff who have been withus for more than 30 years and crew who have been with usfor 20 years, and our partnership with the shipyard inJapan goes back more than 50 years. Our operations man-ager began in 1962.” The company has instituted a quality management pro-

gramme with strategic targets: Plan, Act, Measure, Improveand Monitor. “This programme has allowed us to employsophisticated and modern management techniques whilemaintaining our traditional, family-oriented values as acompany. We have repositioned ourselves from being reac-tive to being proactive, allowing us not only to keep up

SAMOS STEAMSHIP CO.


with new rules and regulations but also to be ahead ofthem, ready for them.”

THE ENVIRONMENT “In relation to the environment, wehave a two-pronged approach: we examine the pollutionwe create, since we use energy, and the waste we produce.We are very sensitive to the rules regarding waste and tryto follow them to the letter. We have bought compactorsand installed them in our ships so we can be as efficient aspossible in terms of waste management and we are happyto see that ports are improving their reception facilities todeal with waste.”Energy consumption and emissions are a challenge of

course, but Samos Steamship Co. examines every part ofthe ship in this area, from light bulbs to galley efficiency– common sense practices. “Once you start thinking in

this way, it becomes habitual – when to put the boiler on,how to adjust to weather conditions and the like.” SamosSteamship Co. is proud to be ISO 14001-2004 certified aswell as ISO 9000 certified. According to Mr Inglessis,ship design is progressing rapidly and he is confidentthat in the near future we will see tremendous advancesin efficiency and, a little farther down the road, perhapseven new forms of energy to power ships. The future of Samos Steamship Co. is also bright and

energetic. Mr Inglessis says that today’s fourth genera-tion of the family is very much looking forward to thefifth generation becoming part of this traditional busi-ness which has a 135-year history. Traditional values, ayoung fleet and modern business practices are pro-pelling Samos Steamship Co. into the next decade with asense of purpose and promise.

SAMOS STEAMSHIP CO.


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Nicholas G. Inglessis, director of Samos Steamship Co.

Eastern Mediterranean Maritime Ltd.

Responsibility and accountabilityon land and at sea

Stephanos Tsonakis meets us in the brand new Glyfada headquarters ofEastern Mediterranean Maritime Ltd., offices that are airy and bright andsparkle in the Greek sun. “In many ways,” says Mr Tsonakis, “these offices

reflect the environment we try to maintain on our ships – open andtransparent so that we have full accountability on all our vessels.”


Responsibility and accountability are im-portant characteristics for this ship man-agement company, which oversees a fleetof 29 vessels, divided almost equally be-tween bulk carriers and tankers and to-talling about 3 million DWT. Crew training, a key component of the

company’s activities, is carried out in East-ern Mediterranean Maritime’s own officesin Greece and in the Philippines. In fact,following the culture of the company,crew does not leave Eastern Mediter-ranean Maritime – this is something weare especially proud of and we like torefer to our crew as our family.” Mr Tsonakis says that the managing di-

rector of the company, Mr Thanassis Mar-tinos, has expressed the company’s viewson crew training perfectly: “If we have anexcellent crew, we do not need a large of-fice staff, since our masters and officersare able to manage the vessels properlyand solve a multitude of problems.” Inother words, the crew fully understandsthe company’s culture and the companyfully supports its crew.

Reflecting Eastern Mediterranean Mar-itime’s hands-on approach, Mr Tsonakissays that Mr Martinos personally devel-oped the company’s philosophy and man-agement systems. “We prepared all ourISM manuals over a period of years, andthey continue to evolve. Our manuals arevery comprehensive and reflect the per-sonal approaches we believe must be im-plemented, above and beyond the stan-dard manuals.”

SAFETY AND THE ENVIRONMENT East-ern Mediterranean considers safety to beone of the most important factors in its

business, a major part of its daily opera-tions. For main jobs on board, it requiresa risk assessment, an evaluation and officeapproval. “My engineering background allows me

to understand the effect of pollution onour environment and I am extremely sen-sitive to these issues,” says Mr Tsonakis.“We are especially concerned about emis-sions from our engines, auxiliary equip-ment and refrigeration and air condition-ing systems. In fact, the company monitorsits safety and environmental standards bysetting KPIs (key performance indicators).“For example,” says Mr. Tsonakis, “bymonitoring refrigerant emissions we areable to track our reduction success – thisis a very important, results-based tool.Overall, we approach the maintenance ofthe entire fleet as a top priority.” Thecompany has a comprehensive preventivemaintenance system covering all parts ofthe ship, not only machinery but everyspace on the ship. In this way we also pre-vent accidents, machinery breakdownsand excessive repair bills. We view this as

EASTERN MEDITERRANEAN MARITIME LTD.


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Stephanos Tsonakis, Technical Manager, Eastern

Mediterranean Maritime Ltd.

an investment, not a cost.” Although theglobal recession has affected shippingdeeply, Eastern Mediterranean has not re-duced its commitment to high perform-ance, environmental and energy savingstandards.The company makes every effort to re-

duce its onboard waste. Proper mainte-nance prevents breakdowns and leakages.“Our bilges are painted light grey – almostwhite. This allows us to very easily assessthe condition of the engine room.”

WIN-WIN PARTNERSHIPS Another com-pany policy is that office Port Captainsand Superintendent Engineers visit theirships very often and in fact sail with them.“We also employ experienced external au-ditors in navigation and fire fighting, whoare sailing on our ships, evaluate the crewand conduct onboard training. Engineer-ing training at sea is done by our experi-ence ex Chief Engineers, who are now em-ployed as port engineers. We consider thisonboard training to be the most valuable

and important type of training. This is awin-win partnership. One of the things wehave achieved is to instil a desire for con-tinuous learning in the crew.“By nature, as part of our company cul-

ture, we seek to improve constantly in allphases of our operations. We carry safetystock of spare parts for all equipment onboard. From the day the ship leaves theyard, we have our standards in place andwe maintain them. In this way, we are re-sponsible and accountable.”

EASTERN MEDITERRANEAN MARITIME LTD.


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The 50,913 DWT Seavenus was built in 2000 at Oshima Shipbuilding Co., Ltd.

Golden Union Shipping Co.

People, the most valuablecommodity of all

For George Gabriel, director of Golden Union Shipping Co., it is not difficult to pinpoint the heart of the company’s values: he points to a photograph of the company staff and simply says, “It is people who

make up the company, and it is people that we invest in.”


From humble beginnings in 1977 in a 50-square-metre office to today’s impressiveheadquarters with hundreds of onshorestaff and more than a thousand employeesat sea in the near future, people remainthe heart of this company, where tradi-tional family values and old-fashionedethics rule. The company will have by theend of 2010 a fleet of 26 bulk carriers witha total deadweight (DWT) in excess of 2.7million.Today, the young recruits have become

executives and have grown with the com-pany. They have been selected as a resultof personal introductions, an HR practicethat ensures that personal traits are in linewith the company ethics and principles,ensuring also proper character, a positiveattitude and a solid belief system. Afterthis, the company examines qualifications.“We convert old-fashioned standards

into efficiency. That seems to work quitewell,” says Mr Gabriel. “In fact this ap-proach is part of our Safety ManagementSystem and also applies to our ship-basedpersonnel.”Golden Union obtains its onboard per-

sonnel from three main sources. One is inGreece, at the company’s main office andoffice on the island of Chios. The secondis at its office in the Philippines, the thirdis at its office in Russia. The company also

recruits fitters and welders through aAgent from Poland.In Russia, Golden Union’s offices are

fortuitously located in the same buildingas the Admiral Makarov State MaritimeAcademy (AMSMA), where the head ofthe electronics department is an advisor toGolden Union’s office, providing the com-pany with a superb pool of talent.“In the Philippines,” says Mr Gabriel,

“we are several steps ahead of other opera-tions since we have created our ownprocesses within an established, quality op-erator. This set up allows us to audit the

operations twice a year and we haveachieved excellent results. Our crew reten-tion rate, especially relating to officers, isapproaching 96%.”In addition, the company maintains a

quality processing procedure, has estab-lished familiarisation processes, has cre-ated and published its own familiarisationbooklets that it uses, and has set up spe-cial training courses, carried out at acade-mies that the company has selected andwhich it monitors.

INVESTMENTS, NOT COSTS In 2003, thecompany also started a programme to em-ploy cadets from the Philippines MaritimeMarine Academy (PMMA), the only Statetraining academy in the country, whichalso produces officers for the country’scoast guard. “Golden Union has entered into a

sponsorship programme with PMMA toensure that we have access to the toptrained officers in the country. This is ahuge step forward for us and entails a con-siderable investment, since we underwrotethe cost of the Academy’s new barracks.Of course, we believe it very importantstep in order to continue providing aquality operation.”In order to ensure a future supply of

well-trained officers, Golden Union has es-

GOLDEN UNION SHIPPING CO.


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George Gabriel, director of Golden Union

Shipping Co.

tablished a new position on board – thatof Junior Officer – which allows an engi-neer, for example, to split his time be-tween his normal duties in the engineroom and the role of an watch keeping of-ficer.

THE ENVIRONMENT – A ZERO TOLER-ANCE POLICY Golden Union has estab-lished its own zero tolerance policy re-garding the implementation of theMARPOL accord. “As with everything that has to do with

safety,” says Mr Gabriel, “our commitmentstarts at the top. In this regard, GoldenUnion has created its own familiarisationpolicy booklet that is used on every vesselby all seamen.”In practice, that means one simple

thing: any part of the ship or piece ofequipment related to safety or the envi-

ronment is fast tracked – it is subject to aturbo process – and receives top priority.“As DPA but also as Director of the com-pany,” says Mr Gabriel, “I brief every mas-ter and engineer personally before theyboard a vessel on company policy so thereare no misunderstandings. We have foundthat our internal standards meet and ex-ceed those for ISO 14000, so we are in theprocess of being accredited to that stan-dard now.”In addition, Golden Union is applying

for Green Passports for all its newbuilds,even though this is in no way mandatory.Plus, a member of its management is atrained MARPOL auditor, allowing thecompany to self-audit using its own offi-cers and ensure full compliance.ISO 14000, TMSA compliance and reg-

ular consulting with Rightship of Aus-tralia, the maritime dry vetting specialists,

ensure that Golden Union is well pre-pared to meet all challenges in respect ofsafety requirements. The company is con-fident that its Health, Safety, Security, En-vironment (HSSE) Handbook is wellthought and most comprehensive andconstantly updates seamen on new regula-tions.

THE DNV DIFFERENCE “It must benoted,” says Mr Gabriel, “that a great dealof our progress has been achievedthrough the fine cooperation we have hadwith DNV over the past 30 years.”Mr Gabriel also reconfirmed Golden

Union’s pledge to continuously train its crew and personnel, try to maintain the best safety and environmental stan-dards and, as he repeated, “demonstrateevery day that commitment starts at the top.”

GOLDEN UNION SHIPPING CO.


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The 76,296 DWT CIC Piraeus was built in 2001 at Tsuneishi Shipbuilding Co. Ltd.

NICKY PAPPADAKIS, Intercargo Chairman

“Many Greek owners have spent several years at sea so they have the practice andthe experience. You will find Greeks in many international fora and the Greek shippingcommunity controls more than 2 000 ships plus newbuildings – we have been in thebusiness for generations,” says Nicholas Pappadakis, the Chairman of Intercargo.

TEXT: MAGNE A. RØE

“Take my own family for example. We built our firsttwo bulk carriers at Mitsubishi in Japan and took deliv-ery of the North King in 1966 and the North Emperor in1967. We could see the need back then and this hasgrown ever since. If you look at the Capesize ships or-dered, Greeks are involved in all of these. Why is that?We have the history, we have, like Norway, a long coastand we have been dependent on sea trade for as longas we can trace our country’s history,” says Pappadakis.Quoting the late Anthony J. Chandris, who was formany years President of the Union of Greek Shipown-ers: “We Greeks are the taxi drivers of the sea.”“I finished my university education in the USA in

1961 and joined the family firm of A.G. Pappadakisand Co. Ltd in London that same year.”“One of our ships, the North Earl, experienced a

boiler explosion 150 NM south of Sicily and three en-gine room crew members were badly burned. A Russ-ian ship was diverted by Amver and the three seamen’slives were saved. I have been very much involved withthe US Coast Guard (USCG) in Amver (AutomatedMutual-Assistance Vessel Rescue System) to do justthat: rescue seafarers in distress.” Amver is a unique, computer-based voluntary global

ship reporting system used worldwide by search andrescue authorities to arrange for assistance to peoplein distress at sea. With Amver, rescue coordinators canidentify participating ships in the area of distress anddivert the best suited ship or ships to respond. 12 000ships from 140 nations participate in Amver, tracking

some 100 000 voyages annually. Since June 1990, morethan 2 000 lives have been saved by Amver ships.“The future is moving towards more energy-efficient

operations and this is a challenge for shipping as theindustry as such does not have a uniform approach. Asan owners’ organisation, we are conscious of the needto be proactive, pragmatic and positive to the role ofshipping as a cornerstone of world trade. Whateverhappens, we fully support the clear advice from ourmembers as the representative of dry bulk owners –that the requirement to reduce international ship-ping’s share of GHG emissions from 2.7% calls for atruly global solution. That solution must have the IMOas its central oversight and strategy-making body.”“The EU, for example, is about to stipulate shipping

emission requirements based on onshore industriesand this is not fair. Around 1.8 million people earntheir living from shipping. Bulk carriers, for instance,would have to pay approximately USD 3.5 million ayear in greenhouse gas fees according to the EU. Asthe chairman of Intercargo, I try to participate in asmany Round Table conferences and other interna-tional fora as I can to ensure a level playing field and adegree of certainty for owners. I am also urging theIMO to respond to this as quickly and firmly as theycan,” says Pappadakis.“Whilst on the subject of emissions, Intercargo is

actively consulting its members on the various optionsfor Market Based Measures (MBMs) previously mootedat the IMO. Of the MBMs raised, there are three

NICKY PAPPADAKIS, INTERCARGO CHAIRMAN


broadly defined options – a compensation fund, anemissions trading scheme and a hybrid schemethrough which a compensation fund mechanism canbe ring-fenced within the maritime sector. Intercargo iscarefully weighing the advantages and disadvantages ofeach of these proposals, taking into thorough consider-ation the collateral costs involved in (and the net bene-fit of) each of the three broadly defined options cur-rently on the table. That said, we are fully committed –alongside our Round Table partners, to positively work-ing towards technical and operational solutions for re-ducing GHG emissions – such as the SEEMP and themandatory EEDI for newbuildings. We are also cog-nisant of the cost implications, so the eventual solutionwill need to avoid complexity, be workable for the drybulk sector (bearing in mind two facts: that the mostcommon ship type over 20 000 GT is, according toEquasis, bulk carriers; and that there are around 1 300dry bulk ship operating companies) and provide cer-tainty to the owner in terms of outlay and targeting,”comments Pappadakis.He emphasises that, in spite of shipping’s role in

the supply chain management process, he remains im-mensely concerned about the position of seafarerscaught-up in Somali piracy matters. With 25 bulk carri-ers and 565 of their seafarers having been seized sinceJanuary 2008, Intercargo and its Round Table partnershave lost no opportunity to explore every option for re-ducing the risk to seafarers, including the publicationof best management practices and unqualified support

for the role of the naval authorities in reacting robustlyto the ongoing threat. “But if this is going to last forsome time until resolution within Somalia, we mayneed to eventually look at the design of bulk carriersbefore they are built to close off any easy entry for pi-rates. We can only do that if the owners, classificationsocieties and shipyards work together at the earliestpossible stage,” says Mr Pappadakis.When asked what the future holds for the bulk car-

rier industry, Pappadakis points to the interesting issueof bulk carrier loading. There are ports with loadingterminals, particularly in Brazil, that have a loading ca-pacity of more than 19 000 tonnes per hour. The ques-tion which can be posed to the whole industry is: arethe existing bulk carriers and the newbuildings onorder able to cope with these high loading rates?This is a complex issue which involves the interface

between the terminal’s capacity and the ship’s capacity.It involves the loading rate, cargo density, vessel’s dou-ble bottom strength, vessel’s longitudinal strength andvessel’s de-ballasting capacity, which depends on theavailable pump capacity. In order to solve this complexissue for the benefit of the industry, it is important thatall the parties – ship owners, cargo owners, terminals,class and yards – work together. The loading speed andrelated issues are high on the Intercargo chairman’sagenda in addition to the green issues relating to theincreasingly large bulk carriers which are more com-plex to operate.

NICKY PAPPADAKIS, INTERCARGO CHAIRMAN


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Nicky Pappadakis, Intercargo chairman, speaking at this year’s CMA event in Connecticut, USA.

ABOUT INTERCARGO

Intercargo is the short name for the

International Association of Dry

Cargo Shipowners.

Its members operate predominantly

Bulk Carriers in the international

dry bulk trades, such as coal, grain,

iron ore and other bulk

commodities. Its main role is to

work with its members, the

regulators and other Shipping

Associations to ensure that

shipping operates safely, efficiently,

environmentally and profitably. To

do this, we actively participate in

the development of global

legislation through the

International Maritime Organization

and other similar bodies.

What started off as a small representativeoffice headed by Danish broker W. Wellishas now become a busy hub serving thewhole of the East Mediterranean andBlack and Caspian Seas and, of course,Greece’s shipping centre, Piraeus.Currently DNV Piraeus is a regional of-

fice, located over three floors of the Kara-giorgis Building at 26-28 Akti KondyliStreet and overlooking the port of Pi-raeus. In addition to the Greek market, itoversees a region consisting of twenty-seven countries and eight offices; fromCroatia and the Balkans in the west, toEgypt in the south, Cyprus and Israel upto Azerbaijan in the east and as far northas Ukraine. The regional office is now re-sponsible for major shipping centres on aworld scale: Greece, Cyprus and Turkeyhave a large number of owners that have

head offices in these three countries.Cyprus has actually become one of thelargest ship management centres in theworld. During the past few years, Turkeyhas also established active newbuildingand ship repairing facilities in Tuzla,where many owners prefer to build or re-pair their vessels. These factors make thisregion an important one for DNV’s Divi-sion Europe and Africa.The hub has managed to multiply in

numbers and competence; at the begin-ning of 2010 there were about sixty per-manent employees working in differentdepartments:� A Regional Office headed by Mr Niko-laos Boussounis

� A Maritime Service Centre & AdvisoryServices Department headed by DrLoizos Isaias

� A Production & Customer Support De-partment headed by Mr Andreas Paga-los

� A Research & Innovation Departmentheaded by Dr Nikolaos Kakalis

� DNV Industry headed by Mr NikolaosCharissis

� DNV Petroleum Services headed by MrVassilis Stamatopoulos

REGIONAL OFFICE The regional office isactively involved in customer service man-agement for the companies located inGreece and also co-ordinates the rest ofthe region. Another of this department’simportant roles is to communicate withthe Greek authorities. It is worth mention-ing that around 970 of the about 4,000-vessel-strong Greek fleet fly the Greek flag.

PROFILING DNV GREECE


DNV’s Piraeus office:

from a representative office to a regional hub

Since 1921 when DNV’s first Greek office was opened in the Cunard

Building at 4 Sotiros Street, many things have changed for Norwegian

classification society Det Norske Veritas in Greece.

TEXT: GEORGIOS TERIAKIDIS

PROFILING DNV GREECE


MARITIME SERVICE CENTRE & ADVISORY SERVICES DEPARTMENT TheMaritime Service Centre (MSC) is proba-bly the most important element of thishub as it caters for many of the needs ofthe local market. Since it was formally es-tablished in 2000, it has gained a goodreputation for training. The courses pro-vided are expanded every year and en-hanced in order to reflect the local andcurrent needs of the participants.

PRODUCTION AND CUSTOMER SUP-PORT DEPARTMENT The Ships in Opera-tion (SiO) department is manned by thir-teen surveyors, who have expertise in allthe types of vessels call-ing into Greece. CAPHull and Machinery sur-veys can also be carriedout by local Greek sur-veyors.This department in-

cludes another team offive auditors. This activegroup, headed by MrFrantziskos Kamizoulis,carries out audits relatingto International SafetyManagement, Approvalof Service Suppliers, ISO9000 as well as ISO14000and other standards. It isworth mentioning thatafter an initial inspection on board thevessel SEACROWN of THENAMARISSHIPS MANAGEMENT in Milazzo, Italyon 22 November 2009, Mr KamizoulisFrantziskos and Mr Olkvam Tommawarded the first ever Maritime LabourConvention certificate.

RESEARCH & INNOVATION This new Re-search & Innovation department was es-tablished in 2008 and has proven to bequite a successful move. With a team offour highly qualified people, DNV Re-search & Innovation (R&I) Greece devel-ops next-generation solutions for energy-efficient, greener and more effectivemaritime transportation. The depart-ment’s activities range from joint industryprojects with Greek shipping companiesto large EU innovative projects as well as astrategic collaboration with the School of

Naval Architecture and Marine Engineer-ing of the National Technical University ofAthens (NTUA).

BUSINESS ASSURANCE Although onlyone person is employed in this depart-ment, it has quite a strong presence, espe-cially in the field of certifying companiesin connection with corporate social re-sponsibility, something that Greek compa-nies have only recently started paying at-tention to.

DNV PETROLEUM SERVICES This vibrantteam of five persons is expanding and of-fers a high quality Fuel Management Pro-

gramme which not only includes fuelquality testing but also provides consultingand training solutions for ship operators,delivering measurable improvements torisk management, cost and operational ef-ficiency as well as environmental perform-ance. It is worth mentioning that the headof DNV Petroleum Services (DNVPS) inGreece is now the Regional Manager forEurope, having managed, together withhis team, to secure a large percentage ofthe local market.

GREEK SHIPPING STATISTICS: A QUICKLOOK Shipping is one of the top contrib-utors to Greece’s Euro 240 billion (USD323.7 billion) economy along with tourismand construction. It accounted for about 5per cent of the country’s GDP in 2009.� Greece owns one seventh of the world’sfleet in terms of deadweight tonnage

(dwt). Its merchant fleet is the secondlargest in the world after Japan andahead of China and Germany.

� Greece’s fleet accounts for about 8 percent of the world’s fleet in terms of ves-sels. The total number of ships in thefleet stands at close to 4,000.

� Greek ship owners are key players in thedry bulk shipping sector, which ferriesstrategic commodities including coaland iron ore, as well being active in theoil tanker market.

� Greek shippers have taken delivery of230 newbuildings since the start of2009. About 367 vessels are on order in2010.

DNV’S PIRAEUS OFFICE

The office has a lot of expertise with which to

serve the needs of the local Greek market through

training, surveys, approvals, etc.

An office where about 65 people work

Within the office we have DNVPS, Certification,

Research and Innovation (the only hub outside

Norway), the Maritime Service Centre, Customer

Service Management Department, Production

(surveys) Department and a regional office covering

the Region East Med, Black & Caspian Seas.

“The Greek shipping cluster is impressive in a global context, withsome 4,000 ships – corresponding to about eight per cent of theworld’s fleet. In tonnage terms, it is even more impressive, with an18 per cent share. DNV has had a presence in the Greek shippingmarket since 1921 and is truly an integrated part of the industryhere. Every time I attend the biennial Posidonia event, I feel like I am coming home to many friends and partners. Although we areexperiencing difficult times in many parts of the global shippingcluster, I believe that the Greek shipping community is managing the situation well. I wish you a successful Posidonia 2010!”

Henrik O. Madsen, DNV CEO.

DNV Research & InnovationPIRAEUS

DNV Research and Innovation (DNVR&I) is the corporate DNV unit with a prime focus on new knowledge and technologies that will have a long-term impact onbusiness growth. In 2008, DNVR&I established a Research & Innovation hub in Piraeus aiming to provide high-calibre R&D solutions for the future needs of

shipping in general and the Greek shipping community in particular.

TEXT: NIKOLAOS KAKALIS

Significant pillars of this are the co-operation with Greek companies andstrategic collaboration with theSchool of Naval Architecture and Ma-rine Engineering of the NationalTechnical University of Athens(NTUA). Since 2008, we have built ateam of highly qualified people witha mix of strong skills in marine, me-chanical and process engineering,significant international experienceand solid networking abilities.The main R&D activities of

DNVR&I Greece focus on the devel-opment of next-generation solutionsfor energy-efficient, greener andmore effective maritime transporta-tion. On the one hand, we are devel-oping a novel tool for the perform-ance assessment and optimisation ofmarine energy systems (propulsionand auxiliaries), a significant aspectof a ship’s/fleet’s daily business. Thistool aims at providing decision sup-port for ships in operation and new-building design, focusing on in-creased fuel savings and reducedemissions. In addition, it is capable of

assessing the potential and opera-tional capabilities of innovative de-signs like the fuel cell systems for al-ternative auxiliary power on cruisevessels being developed in the PaXellGerman joint industry project.On the other hand, DNVR&I

Greece is developing new methodsthat address important problems inthe area of operations and logistics.We are involved in the developmentof decision support tools for (a) opti-mal fleet sizing and allocation whenthere is uncertainty at the strategiclevel and (b) tactical routing, deploy-ment and speed optimisation. Fur-ther maritime logistics work includesthe SuperGreen EU project coordi-nated by NTUA, which aims to de-velop sustainable transport networksby fulfilling requirements relating toenvironmental, technical, economic,social, and spatial planning aspects.Due to being at the forefront in

innovation, DNVR&I Greece andProcess Systems Enterprise Ltd se-cured and initiated the Maritime CCS(Carbon Capture Storage) project

under the EUROSTARS-EUREKA ini-tiative in 2009. This project aims todesign an onboard process for thechemical capture and temporary stor-age of CO2 emissions from ships intransit until discharge into transmis-sion and storage infrastructures atthe next suitable port. The uniquechallenges posed by the maritime en-vironment, including constant shipmovement, limited space and accessto utilities, stringent safety require-ments and the need for energy effi-ciency, are also being considered, ele-vating the level of complexity. Theconcept of maritime carbon captureis completely new in the field of mar-itime transportation, with no currentend-to-end solution available. Assuch, Maritime CCS intends to pro-vide the shipbuilding and relevantmanufacturing industries with asound basis for the development ofCCS systems for ships. In order to brand and position

DNV, the sound results of the hub’swork are presented at internationalconferences and in journal publica-

DNV RESEARCH & INNOVATION PIRAEUS


tions and attract the interest andfeedback of the shipping industry. Ef-ficient collaboration with DNVR&I inNorway ensures the optimal utilisa-tion of competence, acceleration ofdevelopment and creative transfer ofknowledge across units and countries.The strong support from DNV Mar-itime in Greece has also been impor-tant to our progress.DNVR&I Greece has also delivered

a pilot project on a decision supporttool for the financial assessment andcomparison of air emission abate-ment measures. For DNV, a pilot is a

significant step towards developingnew products and services. For ourcollaborating companies, it is also im-portant as they receive a service oftopical interest and come closer tothe most recent DNV developments.These pilots were carried out in col-laboration with tanker operator Arca-dia Shipmanagement and Luis CruiseLines, and our successful interactionhas already resulted in the furtherbusiness development of the tool.Finally, our work and strong inter-

action with one of the most dynamicmarkets worldwide, the Greek ship-

ping community, enable us to takeinitiatives and attract novel projects.The strategic research activities atR&I Piraeus have already contributednew knowledge and methods that willhave a long-term impact on DNV.DNVR&I Greece will continue per-forming high-quality R&D work in re-sponse to today’s questions and theneeds of a sustainable future.

For more information please contact:[email protected]

DNV RESEARCH & INNOVATION PIRAEUS


››

The staff of the DNV Research & Innovation team in Piraeus, from left: George Dimopoulos, Chara Georgopoulou, Nikolaos Kakalis and Panagiotis Tsilingiris.

Structural changes in the grain market

In late April, lively grain trading supported a quite healthy freight market. The average spot freight rates for both Panamax and Supramax vessels were at timeshigher than for the much larger Capesize vessels, and even Handymax vessels saw spot rates rather close to those for vessels about four times larger. A brisk River Plate season for exports of grain, oilseeds and meal contributed strongly to solid

tonnage demand for medium-size bulk carriers.

TEXT: JARLE HAMMER, HM STRATEGIES

Looking at grain freight rates out of the USA, whenthese are at high levels the differential between ratesfrom the US Gulf and US West Coast to the Far Eastwill also be high. Barge operators on the Mississippiwill then face stronger competition from rail and trucktransportation of grain from the Mid-West to the Pa-cific coast instead of the grain being shipped thelonger route via the US Gulf.The international grain trade is overwhelmingly

seaborne and represents a major, growing and highlyvolatile tonnage demand element for bulk carriers.Minor volumes are shipped in containers or by multi-purpose vessels. Rice, soybeans and other oilseeds, aswell as oilseed meals, are closely linked to the grainmarket due to their use, trading patterns and logistics.Trade volumes out of different areas fluctuate stronglyon a seasonal basis due to harvest periods. Crop condi-tions may vary strongly from year to year due toweather or special conditions. On the import side,changes in consumer habits, for instance more use ofmeat, will require more use of feedstuffs. It takes aboutsix times more calories to produce meat compared toeating grain directly. A major observation is that the in-ternational trade in soybeans and soybean meal is nowlarger than the world trade in wheat or coarse grains.Back in 1993, the soybean and meal trade was 45% lessthan the wheat trade and 35% less than the trade incoarse grains. The end use of grains varies widely. TheInternational Grains Council estimates that as much as59% of the world’s maize will be used for feed in2009/10 and the rapidly growing industrial use ac-counts for 25%. The production of ethanol from maizeincreased by 16% in 2009/10, requiring 128 mt ofmaize (109 mt in the USA), and accounts for 16% ofthe global maize consumption. In comparison, just

16% of the wheat is used for feed and only 3% is usedin industry. A survey conducted by the United States Depart-

ment of Agriculture shows that global grain produc-tion will amount to 1,781 million tonnes in 2009/10, ofwhich wheat accounts for 678 mt and coarse grains ac-count for 1,103 mt (maize 806 mt, barley 148 mt).World rice production will amount to 441 mt and theproduction of major oilseeds may total 437 mt (soy-beans 257 mt, rapeseed 59 mt). The combined produc-tion of grains, rice and oilseeds could reach 2,659 mtin 2009/10, which is up 1.0% compared to the preced-ing crop year.The international trade in grain and related dry

commodities will amount to about 440 mt in 2009/10.Wheat accounts for 126 mt and coarse grains for 111mt (maize 85 mt, barley 17 mt). The rice trade willtotal 30 mt, while trades in major oilseeds could reach97 mt (soybeans 82 mt, rapeseed 10 mt). In addition,out of a global oilseed meal production of 235 mt, 69mt will be traded internationally (soybean meal 55 mt).A fairly new dry bulk commodity is DDGS, or DriedDistillers Grains with Solubles. A third of the grain thatgoes into ethanol production comes out as DDGS,which is used as animal feed. US exports of DDGS nowrun at about 5 mt per year and are expected to showstrong growth, with particularly strong interest frombuyers in Asia. Furthermore, the world trade in barleymalt amounts to about 5 mt. Food aid shipments ofgrain are reported to be about 9 mt in 2008/09.The world trade in wheat and coarse grains is ex-

pected to decrease from 253 mt in 2008/09 to 237 mtin 2009/10, with wheat down from 143 mt to 126 mtand coarse grains edging up from 110 mt to 111 mt.Wheat and coarse grain exports are quite concen-

STRUCTURAL CHANGES IN THE GRAIN MARKET


trated, with six countries accounting for as much as71% of the total volume. Export volumes in 2009/10are estimated to be as follows: the USA 76 mt, Canada22 mt, Russia 21 mt, Australia 19 mt, Argentina 18 mtand Ukraine 13 mt. The import side is much more dis-persed, with the following distribution by main im-porting areas: East and South Asia 70 mt, Middle East42 mt, North Africa 30 mt, South and Central America19 mt and Sub-Saharan Africa 17 mt.The world trade in soybeans and soybean meal is

estimated to increase from 129 mt in 2008/09 to 137mt in 2009/10. Three countries, the USA, Argentinaand Brazil, account for as much as 88% of the exportvolume. By looking closer at the soybean complex, wecan see significant differences in the composition ofexports from the three dominant countries. In2009/10, the USA will export 39.3 mt of soybeans, 9.5mt of soybean meal and just 1.5 mt of soybean oil. Thecomposition of Argentina's exports is quite different,with a rather modest 7.0 mt of soybeans and compara-tively very high 27.0 mt of soybean meal and 5.3 mt ofsoybean oil. Brazil will export 26.3 mt of soybeans, 12.0mt of soybean meal and 1.4 mt of soybean oil. On theimport side, there are also significant differences be-tween major importers. China is estimated to produce14.5 mt of soybeans and import 43.5 mt of soybeans,only a marginal 0.1 mt of soybean meal and 2.3 mt ofsoybean oil. This pattern is well in line with this coun-try's general preference for buying raw materials in-stead of processed products. In comparison, the EUproduces only 1.0 mt of soybeans and imports 13.0 mtof soybeans, 22.4 mt of soybean meal and 0.5 mt of soy-bean oil.The oilseed market is a very complex one. Chemical

carriers also find good employment in transporting

oilseed products. The crushing of oilseeds generates235 mt of oilseed meal as well as 98 mt of vegetableoils; of which 19 mt enter international trade (soybeanoil about 9 mt). To complete this picture, the worldproduction of palm oil and palm kernel oil is esti-mated to be 51 mt in 2009/10, of which 37 mt willenter international trade. Malaysia and Indonesia areabout equally large exporters, together accounting for90% of the volume. Vegetable oil is at present thefastest growing demand element for chemical carriers,largely spurred on by the rush for biofuels.Among the most striking features in the grain and

oilseed trades are the trend towards strong increases inwheat exports from Russia and Ukraine and the sharprise in China's soybean imports. Changing food habitsin China and other increasingly rich parts of Asia willcontinue to be a key driver of tonnage demand formedium-size bulk carriers.

STRUCTURAL CHANGES IN THE GRAIN MARKET


Developments in the grain market

North America feeds much of the world, growing and exporting about half of the grainthat moves in international commerce. The U.S. forecasts agricultural exports this yearwill top $100 billion, the second highest level ever, as the global recession eases, prices

rebound and demand builds for grains and oilseed.

TEXT: GEORGE E. JORDAN

And for the first time in several yearsChina is buying corn to add to the$10 billion in U.S. farm goods, mostlysoybeans, it purchased in the first sixmonths of this year. China is now theU.S.’s No. 1 agricultural export mar-ket. As a result, corn prices are risingon speculation that China, theworld’s second largest consumer ofcorn, may need “large-scale” importsof U.S. corn to feed its 1.3 billionpeople if the domestic harvest fallsthis year.

“Pressure has never been greateron agriculture to provide for globalfood security, food defense and en-ergy security while maintaining highquality, safe products throughoutthe value chain,” said Gary C. Mar-tin, president and CEO of the NorthAmerican Export Grain Association,a leading bulk carrier industrygroup.The surge in U.S. agriculture ex-

ports is driven primarily to meet de-mand from animal feeding in China,Canada, Mexico and other countries.Weather, global politics and eco-nomic uncertainty make it difficult topredict the future of dry bulk tradewith scientific accuracy.What’s certain is that current mar-

ket trends – strong world demand,record U.S. crops and yields, and newagri-bulk trade – represent a strongrecovery from the crisis two yearsago, when the global recession bat-

tered the dry bulk sector. In 2008,record high rates and cargos were re-placed by declining freight rates,prices for second-hand vessels drop-ping by up to 70 per cent in thespace of a few months and creditmarket unrest that slashed consump-tion, cut demand for ship transporta-tion and left many carriers unable toobtain letters of credit.While the turmoil has been re-

placed by this year’s bullish outlook,the U.S. bulk carrier industry isclosely watching another potentialcrisis: the oil spill in the Gulf of Mex-ico that threatens to disrupt thebiggest grain-shipping ports in theU.S.So far, US maritime officials have

not restricted passage through themain deepwater channel, the South-west Pass, used by ships carrying com-modities, including oil, coal andgrain on the Mississippi River. Morethan half of the U.S. dry bulk graindestined for export is shipped fromthe mouth of the Mississippi River,just a few miles from the damagedundersea well blanching crude oilsince the Deepwater Horizon drillingplatform exploded April 20. Last year,the U.S. shipped 54.5 million metrictons of corn, soybeans and wheatthrough export terminals located atthe mouth of the Mississippi River, up6.6 percent from a year earlier, ac-cording to U.S. government data.

“As long as the main SouthwestPass remains open, it is unlikely tohave too much impact” on grainprices, Anne Frick, a vice president ofresearch for Prudential Bache Com-modities LLC in New York, said in astatement. “If that is closed and ex-ports are disrupted, it would probablybe a bearish development for U.S.soybeans, soybean meal and corn.”Times of crisis are usually a good

stimulus for innovation, and theNorth American Export Grain Associ-ation says it is focused on several is-sues that impact on the competitive-ness, safety and profitability of theU.S. dry bulk sector. For example, thenumber of bulk carriers has sky rock-eted since 2001 as well as the numberof the largest size vessels, the Handy-max, Panamax and Capesize class car-riers. However, a large number ofsmaller vessels over 20 years old, nearthe end of their total full-time lives,remain in service.Tight credit markets in Europe

raises questions about the dispositionof the smaller, obsolete ships. Thevolume of tonnage sent for recyclingin the first month of 2009 alone wasmore than 40% of the total recycledin the whole of 2006. “Clearly ownerswill do what is most economical andprice of scrap will be part of that, butthis can potentially represent anabrupt lack of supply for this segmentif economically it begins to make

DEVELOPMENTS IN THE GRAIN MARKET


sense to scrap older ships,” said Mar-tin of the North American ExportGrain Association. “We are interestedto find out more. Will the emergingconcerns about debt with Europeanbanks can be a factor in getting someowners to file for protections, liqui-date and sell or scrap some of theships?”Scheduled dry bulk vessel deliver-

ies last year of 71.7 million mdwt andthis year of 102 mdwt means that alarger proportion of the bulk fleetconsists of mammoth freighters.Grain – with its unique demands forsafe and efficient loading and dis-charge — represents only 10 percentof the dry bulk trade. As a result, thegrain association and its membershave begun to focus on initiatives andprograms to maintain a trained cadreof highly competent seafarers experi-enced in the rigors of transportingbulk agricultural goods.

“We are concerned that this in-crease in Handymax, Panamax andCapesize vessels may be resulting in anoticeable deterioration in the levelexperience and competence of offi-cers and crew,” Martin said. “Thepoint is crews will likely get more ex-

perience in coal and ore if they carrythose cargoes 9 times out of every 10voyages.”US farmers and exporters view the

growing global demand as an oppor-tunity to expand trade in productslike distillers’ dried grains with sol-ubles – known as DDGS – a fast grow-ing sector of the agri-bulks trade.DDGS is an ethanol co-product

used as feed for livestock and poultry.When plants make ethanol, they useonly starch from corn and grainsorghum. The remaining nutrients –protein, fiber and oil – are the by-products used to create livestock andpoultry feeds. A third of the grainthat goes into ethanol productioncomes out as DDGS. Each bushel ofgrain used in the ethanol-makingprocess produces 2.7 gallons ofethanol; 18 pounds of DDGS and 18pounds of carbon dioxide.However shipment of processed

grain products like DDGS may be re-stricted by a lack of informationabout shipping characteristics of theproduct. Some bulk carriers classifyDDGS a risk for spontaneous com-bustion and believe vessels carryingDDGS must be equipped with carbon

dioxide fire extinguishing equip-ment. US ethanol manufacturers incoordination with the shippers work-ing through their market promotionand trade associations like the USGrains Council and The North Amer-ican Export Grain Association areseeking IMO classifications forDDGS, corn gluten meal and corngluten feed. Tests conducted under IMO guide-

lines “support the conclusion thatDDGS is should be considered non-hazardous,” Martin said. What ismore, he said, recent research of theLloyd’s Casualty Database for re-ported incidents involving self-heat-ing or spontaneous combustion ofDDGS found no reported casualtiesor incidents in the decade from early2000 through May of this year. Martin concluded: “We want to do

everything we can to provide partici-pants in the shipment of agri-bulkproducts with complete and accurateinformation in order to support ex-panded and profitable trade.”

DEVELOPMENTS IN THE GRAIN MARKET


GARY C. MARTIN –

BIOGRAPHICAL SKETCH

Gary C. Martin has served since June of 2000 as

President and Chief Executive Officer of the North

American Export Grain Association (NAEGA,) the

association of US grain and oilseed exporters. Among

several related activities, he currently serves with the

US Department of Agriculture and US Trade

Representative Agricultural Policy Trade Advisory

Committee, and the Executive Committee of

International Grain Trade Coalition.

Before assuming the presidency of NAEGA, Mr.

Martin was a NAEGA Board Director and officer,

representing Farmland Industries, Inc. At Farmland he

had several responsibilities including Director of Trade

and International Relations, Director of Grain

Marketing, and Founder and President of Farmland

Graños in Mexico.

From 1990 to 1992 Mr. Martin served the

Administration of George H.W. Bush at the US

Department of Agriculture as Deputy Administrator of

Commodity Operations and as an officer of the

Commodity Credit Corporation. In the first year of the

Clinton Administration, from 1992 to 1993, he served

as an advisor to the Special Ambassador to the former

Soviet Union at the US Department of State.

Gary Martin earned a B.Sc. in Agricultural Economics,

with highest honors, from the University of Illinois,

Champaign-Urbana. He is also a graduate of the

University of Missouri, Institute of Cooperative

Leadership, and has graduate studies in International

Transactions at the George Mason University.

Grain loading and stabilityThe shift of cargo, and thus proper stowing, is a concern for ships carrying dry cargo. Cargo that is

accidentally shifted can result in a lack of stability and, in the worst case, the total loss of a ship. Cargomay shift either as a result of poor stowing combined with bad weather or as a secondary effect of an

accident that causes the vessel to heel, such as a collision, grounding or system malfunction.

TEXT: NILS HEIMVIK

SHIFT OF GRAIN CARGO Grain is a typeof cargo that can easily shift when the shipis rolling. The grain may in such condi-tions suddenly form a new surface with anangle of as much as 25 degrees to theoriginal horizontal loaded surface. Thiswill create a heeling moment that in turnreduces the ship’s stability. If the ship issubject to a steady heel over time, this mayescalate the situation, in that more grainmay be shifted.The grain surface may be physically se-

cured by cloths weighed down by bags ontop or by other means (Ref. The IMO’sGrain code, A 16 to A 18). However, this istime-consuming and most ships engagedin the grain trade operate without physi-cally securing the load in order to reducethe time spent in port.Check language of this sentence: In an

“unsecured” grain load, the grain mayshift in the available void spaces formedbetween the loaded grain surface and thedeck and hatch. The larger the voids, thelarger the potential grain heeling momentwill be. There is a significantly higher po-tential grain heeling moment in a partlyfilled hold than in a hold that is fullyloaded. The void space under the deckalso depends on the “trimming” (level-ling) of the grain surface. The more grainthat is filled (trimmed) up in the “underdeck” part of the hold, the less void spacewill be left. The trimming of under deck parts

(“ends”) in a full hold may also be a time-consuming and labour-intensive job. If the“ends” are not trimmed (so-called“untrimmed ends”), the grain surface willform a natural slope from the lower part

of the hatch opening (or from specialfeeding holes) towards the ends of thehold. This produces a void space abovethis sloping surface, and hence there maybe a larger heeling moment than in a“trimmed” hold.

GRAIN STABILITY REQUIREMENTS ANDTHE GRAIN LOADING DECLARATION Toprevent accidents related to a loss of sta-bility due to a shift of grain, grain stabilityrequirements were gradually developed bythe IMO from the earliest mention of thisat the SOLAS conference in 1948 untilthe “International Grain Code”(MSC.23(59)) was adopted on 23 May1991.

The grain code contains specificationsregarding grain stowage, a description ofgrain heeling moment calculations, stabil-ity requirements and documentation re-quirements. For grain stability, there arerequirements regarding the residual stabil-ity (area under GZ curve), minimum GMand maximum heel of 12 degrees due tograin shift.In order for a ship to be allowed to

carry grain without physically securing thegrain surface, it should be equipped withan approved grain loading manual contain-ing, among other things, information on:

� allowable grain heeling moments� the grain heeling moments for filledholds and trimmed and untrimmedends (if applicable)

� the grain heeling moment for partlyfilled holds

� instructions for grain calculations� typical grain loading conditions

This should assist the crew in selectingloading conditions that will be safe forsailing. The grain code also requires the ship

to carry a “Grain Loading Declaration” is-sued by the administration, documentingthat grain may be carried safely and with areference to the approved grain loadingmanual. DNV is authorised to approve grain

stability documentation and issue grainloading declarations for most flag statesworldwide.

For more information, please contact: [email protected]

GRAIN LOADING AND STABILITY


››

Grain loading.

Fitness for cargoThe Fitness for Cargo Programme covers all of the vessel’s major areas, equipment and documentation

that are considered to be important for shipping the cargo without damage.

TEXT: OLE MARTIN ØSTBYE

The classification societies’ overall objec-tive is to ensure the safe operation of theship in all sea and weather conditions. As long as the seaworthiness of the shipis ensured, class pays limited attention to the ‘well-being’ of water-sensitivecargo.The ingress of a small amount of seawa-

ter into the cargo hold does not usuallyrepresent any risk to the safety of the ship,but even small amounts of water may doextensive damage to cargoes that are sen-sitive to seawater, e.g. grain, fertilizer, steeland paper cargoes. Failures of equipmentsuch as de-humidifiers and temperaturecontrols for the cargo holds may alsocause damage to the cargo.

DNV offers an additional service, the‘Fitness for Cargo Programme’, that fo-cuses on cargo safety. Although the pro-gramme is designed for general cargo andbulk carriers that are more than 15 yearsold and less than 5 000 GT, it is also suit-able for younger and larger tonnage.

The programme aims at:� Providing the ship owners with a docu-ment verifying that the vessel is in goodcondition with respect to cargo safety

� Helping to reduce the number of cargoclaims for older tonnage

� Helping to reduce the cargo insurancepremium for well maintained older ton-nage

During inspection, the fitness for cargo isassessed using the following methods:� Visual inspection� Function testing� Ultrasonic tightness testing� Review of documentation

Following a successful inspection, a reportdocumenting the condition and a Fitnessfor Cargo statement are issued. Thisproves that the vessel is very suitable forcarrying water-sensitive cargo.

For more information, please contact:[email protected]

FITNESS FOR CARGO


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DNV surveyor checking hatch cover tightness.

Close-up inspection requirementNew IACS requirements stating the means of access to be provided when

performing close-up examinations entered into force in January 2007. The newrequirements were based on the experience gained from incidents involving the

loss of side shell on Capesize bulk carriers (100,000 dwt and above).

TEXT: WONGSATHIT WONG

Bulk Carriers of 100,000 dwt and above The use of “cherry pickers” for surveys ofcargo hold shell frames The integrity of the side structure is of

prime importance to the ship’s safety andwarrants very careful attention during thesurvey. Bulk carriers generally carry vari-ous types of cargoes, with ore and coalbeing the typical cargoes for large bulkcarriers. Coal may contain sulphur impuri-ties and may give rise to severe corrosion,particularly if suitable coating is not ap-plied and properly maintained.It is not unusual to find highly localised

corrosion on uncoated side shell framesand their end connections. Grooving cor-rosion normally takes place adjacent towelds and is of particular concern for theconnection of side frames to the shellplate in single skin bulk carriers.The motivation for the IACS require-

ment is the safety of the crew and surveyorin the cherry picker. With the hydraulicarm of a cherry picker elevated to a lengthclose to 15 metres at an angle of about 60degrees or less to the horizontal plane,special caution must be taken to preventpotential crushing hazards. Considering the safe distance between

the working platform and side structuresis normally not less than 500 mm in com-bination with the depth of the shell frame,normally in the range of 500 – 600 mm,with increased depth at the frame end at-tachment, the use of a cherry picker hasbeen considered by IACS not to provideacceptable access in order to enable thesurveyor to perform a close-up examina-tion of the upper region of the shellframes in a safe and practical way. The re-quirement for a close-up examination isnormally within an arm’s length. It is im-

portant to note that this is an IACS re-quirement and is applicable to all IACSclass societies.Temporary staging is the preferred al-

ternative in locations where IACS does notallow cherry pickers, but staging is not al-ways a practical solution.Remote Inspection Technique methods

may be used to facilitate the requiredclose-up examination and the thicknessmeasurements required during close-upexaminations. The methods must gener-ally provide the survey results normally ob-tained by the surveyor.Confirmatory close-up examinations

must usually be carried out by the sur-veyor at selected locations to verify the re-sults of the Remote Inspection Techniquemethods.Proposals for the use of Remote Inspec-

tion Technique methods must be submit-

CLOSE-UP INSPECTION REQUIREMENT


››

Left: Conventional cherry pickers are not accepted

as a means of access for close-up examinations of

the upper part of cargo hold shell frames.

Right: Conventional cherry pickers can be used for

surveys of lower and middle regions of shell frames

as an alternative to staging.

ted to DNV for general acceptance in ad-vance of the survey. The use of a Remote Inspection Tech-

nique method may be restricted or limitedwhere there is a record or indication ofabnormal deterioration in or damage tothe structure. If damage is found duringthe course of the survey, the surveyor mayrequire access for examination, e.g. bymeans of temporary staging. The inspection is to be carried out by a

qualified company certified for thicknessmeasurements and the technician(s) musthave adequate knowledge of hull structureinspections. The surveyor must be satisfied with the

method of live pictorial representationand the two-way communication betweenthe surveyor and technician. The struc-ture to be examined is to be clean enoughto permit meaningful examination.

Rope access has occasionally beenused for close-up examinations andthickness measurements of structures inthe cargo holds of large bulk carriers.Our experience with this method is thatarranging the required safety provisionsfor the climbers can be rather time con-suming . Further, the method should belimited to the examination of structureswithout significant corrosion and prefer-ably to areas whose coating has been wellmaintained. Close-up examinations and thickness

measurements are necessary to deter-mine the general condition of the struc-ture and to define the extent of possiblesteel renewals or other measures relatingto the webs and flanges of side shellframes and brackets. However the sur-veyor may give special consideration tothe extent of examinations and measure-

ments if the structural members show no signs of thickness diminution com-pared to the “as built” thicknesses andthe coating is found to be in “as-new”condition (i.e., without any breakdownor rusting) or areas previously renewedor re-coated are found to be in “as-new”condition.For example, at renewal survey No.4,

all the shell frames in all the cargo holdsmust normally be examined and meas-ured. The scope may be reduced butmust as a minimum cover 25% of thetotal number of hold frames on the portand starboard sides, equally distributedthroughout the hold length including at each end in way of transverse bulk-heads.


CLOSE-UP INSPECTION REQUIREMENT


Access to structures for close-up examinations of the cargo hold shell frames of bulk carriers (IACS UR)

Annual survey Intermediate Renewal survey Intermediate Renewal survey

survey below No.1 surveys above No.2

10 years of 10 years of and subsequent

age age surveys

Permanent and/or

Temporary Staging Ok Ok Ok Ok Ok

Hydraulic arm vehicles

(“Cherry Pickers”) Ok Ok Ok No*) No*)

Rafts (provided the hold’s

structural capacity is

sufficient to withstand static

loads at all water levels) Ok Ok Ok Ok Ok

Lifts & Movable Platforms Ok Ok Ok Ok Ok

Portable Ladders Yes**) No No No No

*) Conventional cherry pickers can be used for surveys of the lower and middle regions of shell frames as an alternative

to staging

**) Portable ladders fitted with a mechanical device to secure the upper end of the ladder are acceptable for examining

the lower region of shell frames as required during annual surveys

Bulk carriers, being cargo ships, need tocomply with this requirement in accor-dance with the above schedule. Ownersare required to provide the ship with aship-specific emergency towing procedure.Such a procedure must be carried aboardthe ship for use in an emergency situationand is to be based on existing arrange-ments and equipment.The emergency towing procedure,

which is to form part of the emergencypreparedness as required by Paragraph 8of Part A of the International Safety Man-agement (ISM) Code, is not required tobe approved. It will, however, be auditedand verified during the ISM periodicalaudit.As a minimum, the following must be

included in the Emergency Towing Booklet:

� Diagrams for assembling and riggingtowing equipment fore and aft.

� Scenarios, including power shortageand dead ship situations, and a corre-sponding quick reference decision ma-trix that summarises options.

� The organisation of the crew and tasks.� A communication plan listing all the in-formation that the ship needs to com-municate to the towing ships.

� An inventory and the location of equip-ment, connecting points and the relatedSafe Working Load.

� Other preparations and related infor-mation.

Not all ships will have the same degree ofshipboard equipment, so there may belimits to possible towing procedures. Nev-ertheless, the intention is to predeterminewhat can be accomplished and providethis information to the ship’s crew in aready-to-use format (booklet, plans,poster, etc.)Some flags and recognised organisa-

tions have issued guidelines for the prepa-ration of the Emergency Towing Proce-

dures. However, the challenges facing theowner are, in our experience, related to:� How to ensure the SWL of the towingbollards, chocks or other strong points,and how to ensure that the under-deckstructures of those strong points canwithstand the same SWL?

� How the procedure can be developed insuch a manner that it can be presentedin a clear and easy to understand formatthat will aid smooth and swift applica-tion in an emergency situation?

DNV’S SOLUTION DNV has launched aservice to help ship owners prepare thevessel-specific Emergency Towing Booklet.The service includes:

� An engineering analysis of the SafeWorking Load (SWL) of onboard tow-ing equipment, such as bollards, chocks,fairleads or other strong points andtheir under-deck stiffening.

� The development of ready-to-use ship-specific procedures for swift and smoothapplication in the case of an emergency.

� Training in the implementation ofEmergency Towing Procedures.

Since the service was launched, DNV hassuccessfully helped numerous passengership owners and newbuilding ship ownerswith the above tasks as the implementa-tion date for those segments was 1 January2010.


EMERGENCY TOWING BOOKLET


Emergency Towing Booklet

A new requirement for bulk carriers

A new emergency towing procedure requirement was adopted by SOLAS MSC.256(84) on 16 May 2008.

TEXT: ALEXANDRA MACIOLOWSKA AND RICHARD TAO

All ships above 500GT are to be provided with a

ship-specific emergency towing procedure. The

implementation will be as follows:

1. All passenger ships, not later than 1 January

2010

2. Cargo ships constructed on or after 1 January

2010, and

3. Cargo ships constructed before 1 January 2010,

not later than 1 January 2012.

Tankers above 20,000DWT also need to comply

with this new requirement as the existing

emergency towing requirement does not

necessarily include a proper procedure.

EXPERIENCE WITH LOW SULPHUR IN EUROPEAN PORTS


Experience with low sulphur in European ports

On 1 January 2010, Directive 2005/33/EC imposed a 0.1% max sulphur limit on fuels used at berth in EU ports. Leading up to the implementation, the industry was involved in anunprecedented wave of criticism with respect to the potential technical and safety consequences,

and many industry organisations and equipment manufacturers aired their concerns.

TEXT: JOHN STIRLING

Industry associations and sub-groupsworld wide were all scrambling to pro-vide information and advice on the bestand safest way forward to comply withthe Directive.DNV issued a paper called “Low Sul-

phur Fuels – properties and associatedchallenges”, in which a combination ofDNV’s broad experience in environmen-tal aspects, design modification and fuelquality gave our customers an in-depthunderstanding of the complex chal-lenges awaiting.However, the EU Directive is not the

only new legislation. California also intro-duced and updated its 24 nm regulationswith respect to gas oil and distillate in usealong the Californian coastline. And wemust not forget MARPOL Annex VI,whose next wave of changes to ECA re-quirements and heavy fuel oil quality willwash ashore on 1 July 2010.All the above regulation updates will af-

fect, and already have affected, the avail-ability and, not least, quality of the prod-uct being delivered to the marineindustry. We in DNV are striving to collect,study and disseminate all the experienceswe and our customers have seen so far.This vital feedback can then be used toupdate routines and minimise the safetyand quality issues that the industry is cur-rently discussing.So, what have we seen so far? Well, that

can be split into three main areas – on-board/operational experience, the statu-

tory reaction and, not least, the effect onthe fuel quality/properties.Feedback early in the process from

DNV customers was that they were espe-cially worried about boiler usage, as boilermanufacturers had issued warnings aboutthe use of the low sulphur gas oil and theconsequences for particular boiler types ifthe recommended upgrading was not car-ried out. This high energy, low viscosityproduct COULD result in increased inter-nal leaks in fuel pumps, over-firing and anincreased risk of flame failures, in-systemgassing due to the higher energy contentfuel being introduced into the hot system,increased local heating, increased smok-ing, fuel vapours in the furnace, flamebacklash and ignition failure.

From the engine point of view, too lowviscosity (below the OEM’s minimum ad-vised limits) at the engine inlet could leadto internal booster and fuel injectionpump leaks, a reduced supply of fuel tothe engine and reduced atomisation. Con-sequently, the output would be reducedand, not least, could lead to start and lowload challenges, including main enginereversing failures. Lubrication properties were also iden-

tified to be a potential problem, althoughthe marine industry’s experience of con-tinuous operation using such fuels is lim-ited and more is required. DNV Petro-leum Services is at the momentcoordinating the lubricity testing of itscustomers’ gas oils in order to map theactual experience against the deliveredquality.The minimum viscosity, in particular

for the larger bore engines and most of allpropulsion engines, seems likely to be abigger challenge, and DNVPS-tested vis-cosity results so far show that over 40% ofthe gas oils tested in 2009 were lower than3 cSt at 40°C. Further, 8-10% were under2.5 cSt which, at the engine inlet and es-pecially in hot climates, would be undermany OEMs’ minimum recommendationsfor specific engines.As such, the discussions now relate to

coolers and chillers as well but, as for theboiler upgrades, they also involve availabil-ity, cost and the time needed to modify. Even the EU was pressurised into issu-



ing a statement that, although it was awareof an estimated 8-month lag in upgrading,this was no excuse for non-compliance asthe regulations and directives had allowedample time for these challenges to be ad-dressed. Customers have already reportedthat Trieste and other Italian ports havefined, detained and even banned vesselsfrom entering due to multiple non-com-pliances. This trend will only continue, asmore and more ports enforce the direc-tive according to its wording, with Swe-den, Norway and the UK all recently en-forcing it, albeit with slightly differentguidance.On the changeover from heavy fuel to

compliant low sulphur gas oil, many cus-tomers have experienced that the actualchangeover time is longer than the calcu-lated estimates, probably because it takeslonger than anticipated to displace thehigh sulphur product contained in thelines and equipment in order to push the0.1% gas oil under the compliance limit. When MARPOL Annex VI, SECA (now

ECA) regulations came into force impos-ing a limit of 1.50% sulphur for heavy fuel

oil, DNV Petroleum Services’ sulphur testresults showed that suppliers took a longtime to get a real hold on the blendingprocess: even by early 2010, around 10%of all samples tested showed a BDN <1.50% sulphur, giving a >1.50% sulphurresult. This is a marked increase in poten-tial compliance, as in 2008 around 17.5%of those samples tested were over the1.50% BDN sulphur limit. However, until1 July this year, ports have not had the leg-islation in place to verify the sulphur re-sults; as from this date, the verificationprocess will come into force and the indi-vidual countries can start to test MARPOLsamples and verify that MARPOL AnnexVI compliant fuel is being delivered, espe-cially in ECAs.On the bright side, so far DNVPS’ test-

ing of 0.1% S EU directive samples haveshown a much higher percentage of resultsunder 0.10%, with only a few areas showingsystematic potential non-compliance.And a recent DNVPS’ customer survey,

carried out to map not only operationalchallenges but also port state controlsand implementation and checking, con-

firmed most if not all of the above: themarket was struggling to adapt to longlead times for delivery of modifications.However, on a positive note, many ofthose asked said their people were pre-pared, aware and trained in routines, al-though they also said that continuoustraining was necessary.The availability, or rather lack of it, was

an issue in some ports, although generallyfor 0.1% gas oil: the larger ports haveproducts available, assuming a largeenough volume is ordered. On the heavyfuel (HFO) side, specifically made 1.00%low sulphur HFO is generally not beingdelivered but the signals are that the mar-ket is trying to adapt to the 1 July 2010change from 1.50% to 1.00% in ECAs. One of the survey’s findings regarding

port state controls was that many portshad already begun to verify compliancewith the directive, with additional smallerports starting to verify. An important sig-nal for those customers that might bechecked in the future was that 15% of thegas oil bunker samples tested had a sul-phur value above the limit of 0.10%. This



is higher than DNVPS’ general impressionfrom its testing. However, so far, no onewho answered this study has been fined,delayed or banned from ports.From a quality point of view, 40% of re-

spondents said they had problems segre-gating the 0.10% sulphur quality andkeeping it compliant in their systems,while 15% reported filter choking andfuel pump seizure.Surprisingly, almost 1/3 of the respon-

dents admitted to not testing their distil-late quality routinely, which DNVPS’ qual-ity statistics show means that these shipsare running the risk of non-complianceif/when checked due to using viscositybelow the OEM’s minimum viscosity forpumps, the risk of having a commer-cial/quantity loss on delivery (as in manyports, the delivered density is consistentlylower than the BDN density, giving less

product actually delivered) and, finallyand most importantly, the risk of havingless than a 60 degree flash point on board,which contravenes SOLAS 1992 Regula-tion 15 and renders the ship out of Classand subsequently without insurance ifClass is not notified.So, the experiences so far have been

wide and varied, with the main messagebeing that, in 2010, more and more portstates seem to be enforcing and verifyingthe 0.1% gas oil at berth EU regulationand that, come 1 July 2010, port state con-trols now have the weapons in their arse-nal to implement the verification processfor heavy fuel oil 1.00% max S in ECAareas. Operationally and directly associated

with the sulphur, the reported problemson the gas oil side have been fewer thanexpected but more and more potential

problems are arising caused by the regu-lations and the subsequent quality of gasoil necessary for compliance (eg flashpoint, low viscosity). On the fuel side, thechangeover time from heavy fuel to gasoil has been flagged as a bigger challengethan previously thought, plus we areawaiting the 1 July ECA limit change,where we anticipate, as for 1.50%, thatthe industry will take time to adapt inorder to even approach compliance withthe 1.00% Sulphur regulation. However,this time the port state controls do havethe legislation in place to map compli-ance and non-compliance.


THE NEW IMSBC CODE


The new IMSBC Code –

The International Maritime Solid Bulk Cargoes CodeOn 4 December 2008, by Resolution MSC.268(85), the International MaritimeOrganisation (IMO) adopted new regulations for the carriage of solid bulk

cargoes. The new code, the International Maritime Solid Bulk Cargoes Code –hereafter called the IMSBC Code – will supersede the existing Code of Safe

Practice for Solid Bulk Cargoes – hereafter called the BC Code.

TEXT: ARNE LAUDAL

Owners have been able to apply theIMSBC Code on a voluntary basis since2009-01-01 and will become mandatory forall ships carrying solid bulk cargoes, with-out any transitional period, on 2011-01-01when amendments to the InternationalConvention for the Safety of Life at Sea(SOLAS) enter into force.All ships carrying solid bulk cargoes in

general and dangerous solid bulk cargoesin particular will be required to complywith the new IMSBC Code, irrespective oftheir keel-laying date or gross tonnage.Owners must be aware that Port State

Controls and the Port Authorities of anumber of major trading nations requireproof of compliance with the BC Code orthe IMSBC Code, i.e. that a valid “Docu-ment of Compliance for the Carriage ofDangerous Solid Bulk Cargoes” is avail-able on board.

Operators should also remember theexisting requirements of the InternationalConvention for the Safety of Life at Sea(SOLAS) applicable to cargo ships of 500GRT or over that are constructed on orafter 1984-09-01 and to cargo ships of lessthan 500 GRT that are constructed on orafter 1992-02-01. Specific requirementsconcerning the carriage of dangerousgoods, both in solid bulk form and aspackaged goods, in addition to the goodsstated in the IMSBC Code are stipulated

in the SOLAS Convention: Ref. SOLASReg.II-2/19 and SOLAS Ch. VII – some ofwhich are mentioned below.

THE IMSBC CODE AND ITS CONTENT:The format of the IMSBC Code is similarto that of the existing BC Code. Like theBC Code, the IMSBC Code categorisescargoes into three groups – A, B and C:

� Group A consist of the cargoes whichmay liquefy if shipped with moisturecontent in excess of their transportablemoisture limit.

� Group B consists of cargoes which pos-sess a chemical hazard which could giverise to a dangerous situation on a ship.

� Group C consists of cargoes which arenot liable to liquefy (Group A) and donot possess chemical hazards (GroupB).

Detailed requirements relating to eachtype of cargo are stated in the Code’s indi-vidual schedules.

The IMSBC Code contains some newschedules:

� Chopped rubber and plastic insulation:Characterised as a Group C cargo and

described as “Plastic and rubber insula-tion material, clean and free from othermaterials, in granular form.”

� Coarse chopped tyres: Characterised asa Group C cargo and described as“Chopped or shredded fragments ofused tyres in coarse size.”

� Direct reduced iron (C) (by-productsfines): Characterised as a Group Bcargo and therefore dangerous. De-scribed as “A porous, black/grey metal-lic material generated as a by-product inthe manufacturing and handlingprocesses of Direct Reduced Iron (A)Briquettes, hot moulded and/or DirectReduced Iron (B) Lumps, pellets, cold-moulded briquettes. The density of DRI(C) is less than 5 000 kg/m3.”

� Granulated tyre rubber: Characterisedas a Group C cargo and described as“Fragmented rubber tyre materialcleaned and free from other materi-als.”

� Linted cotton seed: Characterised as aGroup B cargo and therefore danger-ous. Described as “Cottonseed withshort cotton fibres adhering to the ker-nel after approximately 90–98% of thecotton have been removed by machine.”


THE NEW IMSBC CODE

� Sulphur (formed, solid): Characterisedas a Group C cargo and described as: “Aco-product recovered from sour gas pro-cessing or oil refinery operations thathave been subjected to a formingprocess that converts sulphur from amolten state into specific solid shapes(e.g. prills, granules, pellets, pastilles orflakes). It is bright yellow in colour andodourless.” It is important to note thatthis schedule is NOT applicable tocrushed, lump and coarse-grained sul-phur. For sulphur in this condition, theschedule Sulphur UN 1350 (crushedlump and coarse grained), which ischaracterised as a Group B cargo, is tobe used.

We would also like to draw your attentionto some of the schedules and some specialitems:

� Aluminium smelting by-products or Alu-minium remelting by-products, UN3170: The ventilation requirements have

been changed. Continuous mechanicalventilation is now required for thiscargo. This means that the Load LineConvention must be fulfilled whichagain means that the height from thefreeboard deck to the ventilation open-ings must be at least 4.5 metres.

� Brown coal briquettes and Coal: TheCode states that “the master shall en-sure that these cargoes are not to bestowed adjacent to hot areas”. This state-ment is rather vague taking into ac-count its importance and the fact that itis a statement in a code that will soonbe mandatory.

The IMO recognised this and the issuewere discussed by the subcommittee onDangerous Goods, Solid Cargoes and Con-tainers (DSC) at its 14th meeting in Lon-don at the end of September 2009.

The DSC has proposed the following in-terpretation of “adjacent to hot areas:

Boundary areas of the cargo hold in con-tact with the cargo having a temperatureconsistently greater than 55 degr. C dur-ing carriage of the cargo, such as some-times can be experienced when heatedfuel oil service tanks and fuel oil settlingtanks have a common boundary with thecargo hold.

And, as a result of this that:

Heated fuel oil tanks adjacent to cargospaces carrying these cargoes should notnormally be regarded as hot areas whenthe fuel oil temperature is controlled atless than 55 degr. C; this temperature isnot exceeded for periods greater than 12hours in any 24-hour period; and the max-imum temperature of the fuel oil does notexceed 65 degr. C.

The above proposal has been forwardedto the Marine Safety Committee (MSC) tobe discussed and possibly approved atMSC 87 on 12-21 May this year.

The schedule for Coal has been amendedto also include references to the carriageof coal on gravity-fed self-unloaders.

� Direct reduced iron (B) (Lumps, pel-lets, cold-moulded briquettes) and thenew schedule Direct reduced iron (C)(By-product fines): Prior to loading,these two schedules require provisionsto be made to introduce a dry, inert gasat tank top level so that the inert gaspurges the air from the cargo and fillsthe free volume above. The ship mustbe provided with the means to ensurethat the Code’s requirement that theoxygen concentration must be keptbelow 5% can be achieved and main-tained throughout the voyage. Theship’s fixed CO2 fire-fighting systemSHALL NOT be used for this purpose.

� Seed cake, containing vegetable oil UN1386 (b), Seed cake UN 2217 and Sul-phur UN 1350 (crushed lump or coarse-grained): These cargoes require theventilation openings to be equippedwith “spark arresting screens”. Due tothe fact that DNV was the only classifica-tion society that distinguished between“spark arresting screens” and “wiremesh”, we have now deregulated our re-quirement and decided that “suitablewire mesh” can be used instead of“spark arresting screens”. A suitable wiremesh will be a mesh with openings thatare a maximum of 13 x 13 mm.

� Seed cake, containing vegetable oil UN1386 (b) solvent extraction only andSeed cake UN 2217: According toSOLAS Reg. II-2/19, Table 19.2, Note 7and Reg. II-19.3.4.1 these cargoes re-quire “Adequate power ventilation inthe enclosed cargo spaces. The arrange-ment shall be so that at least six airchanges per hour are maintained, basedon the volume of the empty cargohold.” In other words, these cargoes re-quire continuous mechanical ventilationwhich again means that the Load LineConvention must be fulfilled and thatthe height from the freeboard deck tothe ventilation openings must be at least4.5 metres.

Some new sections have been added:

The new section 1.5: Containing informa-tion concerning tripartite agreements onthe acceptance of exemptions from theIMSBC Code and the application of devi-ating measures compared to those re-quired by the Code

The new section 11: Containing informa-tion concerning “Security provisions”.

And finally, the added Supplement. In thisSupplement you will find some IMO docu-ments that are related to the IMSBCCode:

THE BLU CODE: The intention of theCode of Practice for the Safe Loading andUnloading of Bulk Carriers is to provideguidance to masters of bulk carriers, ter-minal operators and other parties con-cerned with the safe handling, loadingand unloading of solid bulk cargoes. Thiscode is also linked to SOLAS Reg. VI/7 –Loading, unloading and stowage of bulkcargoes, as amended.

THE BLU MANUAL: The intention of theManual on Loading and Unloading ofSolid Bulk Cargoes for Terminal Repre-sentatives is to provide more detailedguidance to terminal representatives (asdefined in the BLU Code) and others in-volved in the handling of solid bulk car-goes, including those responsible for thetraining of personnel.

MSC/CIRC. 908 – Uniform Method ofMeasurement of the Density of Bulk Car-goes: This circular describes a method formeasuring the density of bulk cargoes.Prior to loading bulk cargo on a bulk car-rier, the shipper is required to declare thedensity of the cargo, which must be veri-fied by an accredited testing organisation.Due to the need for a common method tomeasure the density of bulk cargo, theIMO adopted the performance specifica-tion for measuring the density of such car-goes set out in the annex of this circular.

MSC/CIRC. 1146 – Lists of Solid Bulk Car-goes for which a Fixed Gas Fire-extin-

guishing System may be Exempted or forwhich a Fixed Gas Fire-extinguishing Sys-tem is Ineffective: The annex of this circu-lar contains two tables:

Table 1 is a list of solid bulk cargoes forwhich a fixed gas fire-extinguishing systemmay be exempted. This includes the car-goes listed in SOLAS Reg. II-2/10.7.1.4and the cargoes listed in the IMSBC Codewhich are not combustible or constitute alow fire risk.

Table 2 is a list of solid bulk cargoes forwhich a fixed gas fire-extinguishing systemis ineffective and for which a fire-extin-guishing system giving equivalent protec-tion must be available. A waterspray/deluge system is typically used forthese vessels.

RES. A. 864(20) – Recommendations forEntering Enclosed Spaces Aboard Ships:The object of these recommendations isto encourage the adoption of safety proce-dures aimed at preventing casualties toship personnel entering enclosed spaceswhere there may be an oxygen-deficient,flammable and/or toxic atmosphere. Prac-tical recommendations for all types ofships and guidance to seafarers are out-lined in the annex to the resolution.

MSC.1/CIRC.1264 – Recommendations onthe Safe Use of Pesticides in Ships Appli-cable to the Fumigation of Cargo Holds:Insect and mite pests on plant and animalproducts may be carried into the cargoholds with goods (introduced infestation),they may move from one kind of productto another (cross-infestation) and theymay remain to attack subsequent cargoes(residual infestation). The annex of thiscircular provides guidance to masters inthe use of pesticides (fumigants) with aview to personnel safety.

BC.1/CIRC.66 – Contact Names and Ad-dresses of the Offices of Designated Na-tional Competent Authorities Responsiblefor the Safe Carriage of Grain and SolidBulk Cargoes: The annex of this circularcontains a revised list of contact namesand addresses of the offices of designated

THE NEW IMSBC CODE


national competent authorities of IMOmember states’ administrations responsi-ble for matters relating to the carriage ofgrain and solid bulk cargoes.

It should also be noted that some of theseIMO documents are currently under re-view with a view to harmonising their pro-visions with those of the IMSBC Code andother IMO instruments.

DNV’S IMPLEMENTATION OF THE NEWCODE. The new IMSBC Code is for manypractical reasons a renaming of the oldBC Code. However, the references in the

“Document of Compliance for the Car-riage of Dangerous Goods” will bechanged from BC Code references toIMSBC Code references.

As agreed with the flag authorities that wehave asked, DNV will implement thischange at the 1st Dangerous Goods Re-newal Survey that is scheduled on or after2011-01-01.

Please note that DNV will issue a new Doc-ument of Compliance for the Carriage ofDangerous Goods with references to thenew IMSBC code before the first renewal

survey after 2011-01-01 if so requested bythe owner or manager.

The “Statement of Compliance for theCarriage of Solid Bulk Cargoes in GroupsA and C”, with references to the IMSBCCode instead of to the BC Code, will be is-sued directly by our surveyors as before. Itshould be noted that no survey is neces-sary for the issuance of this statement.


THE NEW IMSBC CODE


Hatch cover maintenanceCargo hatch covers are important for the safety of the vessel, crew and cargo. Ensuringweathertight integrity while at sea is the primary objective of hatch covers. A number ofreported casualties are related to the loss of weathertight integrity due to the collapse of

hatch cover steel structures or failure of securing and locking devices.

TEXT: SÖNKE POHL

One such casualty was the bulk carrierChristopher, which sank 150 nm off theAzores in December 2001 with the loss of27 lives. Following engine failure in heavyweather, the forward cargo hold was ap-parently flooded through a collapsed/ unsecured hatch cover. In addition, cargo hatch covers have to

protect the stowed cargo in the holdsfrom damage due to water ingress, partic-ular if the cargo is sensitive to water dam-age. It must be noted that a significantportion of all cargo-related claims arecaused by water damage, and many ofthese are related to seawater ingressthrough cargo hatch covers.According to the North of England P&I

Club, the top ten typical defects whichlead to claims related to water damageare:

1. The seal set is beyond the point of re-placement

2. The seal is worn/torn, displaced ormissing (including cross-joints)

3. Temporary seal fixes4. Wastage of steel support pads or cover

side plates5. Blocked drain holes6. Wasted cross-joint drain channels7. The cross-joint cleating or alignment is

faulty8. Cleats and support stools are wasted or

missed9. Holes in steel plating due to corrosion10. Worn centre line wedge devices on

side rolling covers which cause crossjoints to open when the ship is at sea

As such, it is obvious that proper condi-tion monitoring of the cargo hold hatch

cover system and a consistent mainte-nance scheme are essential for the safetyof the vessel, crew and cargo.

From the above figure, it can be seen that50% of hatch cover defects are connectedto the sealing and drainage arrangementwhile 18% are linked to the covers’ struc-tural strength aspects.Following a number of measures intro-

duced by the IMO and IACS to ensurethat hatch cover arrangements are fit forpurpose at the newbuilding stage as wellas when existing bulk carriers are up-graded, the IMO has implemented a stan-dard scope of inspection and maintenanceso that bulk carrier hatch covers will betaken care of by owners and operators.The on-board maintenance pro-

gramme which is stipulated in the IMO’s

HATCH COVER MAINTENANCE


››

Damaged resting pad.

››

Corroded hatch cover.

››

Seal with permanent set.

“Standards for owners’ inspection andmaintenance of bulk carrier hatch covers”and is to be established by the owner oroperator must be directed towards the fol-lowing points:

1. The overall structural strength is to bepreserved by protecting the exposed sur-faces of the hatch cover plating and stiff-eners.It is essential that the protective coating

of the hatch cover structure is maintainedin order to sustain the overall strengthand avoid expensive repairs. Particularlysingle skin folding type covers are quitechallenging in this respect as accessibilityis difficult.

2. The surface smoothness and correctprofile of trackways of rolling covers, com-pression bars and other steel work bearingon seals or friction pads are to be pre-

served to reduce wear rates on these com-ponents.Corroded or damaged trackways affect

the movement of hatch covers and maylead to misalignment. Trackways are there-fore to be kept clean and in a goodpainted condition.An effective seal can only be obtained

if the compression bar is straight, undam-aged and non-corroded. If this is not thecase, the compression bar must be re-paired or replaced.Any debris left over from the last cargo

operation will accelerate the wear rate ofresting pads.

3. The hydraulic or mechanically poweredopening, closing, securing or cleating sys-tems are to be maintained in accordancewith the manufacturer’s recommenda-tions.All parts that move when operating the

covers are to be kept in good condition.The play of hatch cover hinges and wheelsis to be verified to be within the toler-ances. Otherwise this will cause the slew-ing of panels. Besides other movableparts, the wheel spindles, hinge pins,racks, pinions and hydraulic cylinder bear-ings are to be regularly greased.The hydraulic system’s oil stowage tank

level is to be monitored regularly. This isto ensure that the hydraulic cylindervalves are balanced to prevent the hatchcover panels from twisting. Oil samplesshould be taken frequently to verify thecondition and, if necessary, the oil is to bechanged.While the hydraulic oil might last for

approx. five years, the oil filters are to bechanged more frequently as stated in themanufacturer’s instructions.

4. Where it has been identified that rest-ing pads, compression bars, seals, etc, areto be replaced due to significant wastage,wear or loss of adjustment capability, theadjustment of manual cleats is to be main-tained.The function of the cleats is to keep

the hatch covers in position and maintainthe seal’s design compression. The exces-sive trimming of cleats will not improveweathertightness but will lead to the accel-erated wear of seals.

5. Seals and other wear components are tobe replaced in accordance with the manu-facturer’s recommendations. This requiresa sufficient number of spare parts of thecorrect specification to be carried onboard or obtained, keeping in mind thatseals are designed for a particular degreeof compression, hardness and chemicaland wear resistance.

The lifetime of hatch cover seals is in therange of four to five years given normaloperations and maintenance. This periodfits perfectly with the special survey inter-val and allows sufficient replacement time.Otherwise, due to the wear on steel-to-steel work or misalignment of hatch cov-ers, the seals might have to be replacedearlier depending on the permanent setof the seals. In general, the manufacturer



Seals & Channels27%

Cleats & Wedges21%

Pontoons & Panels18%

Drains & Non-Return Valves

14%

Operating Mechanism11%

Compression Bars9%

››

Typical Hatch Cover Defects

should state the permissible permanentset but a well recognised standard is toallow for 50% of the initial design com-pression which is stated in the hatch coveroperating and maintenance manual.In general, it is advisable to change the

entire length of the respective seal at thefirst opportunity.

If resting pads are worn out, they haveto be repaired in accordance with theiroriginal dimension. Although the relativemovement of hatch covers is small on typi-cal bulk carriers compared to on openhatch vessel with a higher torsional flexi-bility, it is advisable to use replaceable andadjustable low friction pads.

6. All hatch cover drains and their non-re-turn valves, where fitted, are to be kept inworking order, noting that any drains fit-ted to the inboard side of seal lines willhave non-return valves to prevent wateringress to holds in the event of boardingseas. It should go without saying that, after

each cargo operation, the coaming topsand cross-joint channels are to be cleanedby removing any loose scale or cargoresidue. The same applies to the coamingdrain holes and the non-return valves,which are to be checked to ensure theyfunction, e.g. is the rubber ball movingfreely.

A hatch cover inspection and mainte-nance routine which fits chronologicallyinto the hull inspection and maintenanceplan has to be implemented. With regard to continuous mainte-

nance, the schedules might in general callfor the following intervals and should in-corporate the manufacturer’s guidelines:� After every cargo operation� Every three months� Every 12 months

The IMO standard lists a number of hatchcover items which are to be inspected oneach voyage cycle but not more than onceper month. As certain items can be in-

spected only while the covers are open orsemi-open, e.g. the sealing and drainingarrangements, others may be inspectedduring the voyage to reduce interferenceto cargo operations as far as possible. Al-though it is widespread practice to openhatches on voyages for different tasks, thisshould only be done if due care is paid tothe risks involved. Due considerationshould be given to the time needed tocarry out an inspection to allow for an effi-cient maintenance and inspection plan.For example, more time for inspection isto be considered for the forward hatcheswithin 25% of the ship’s length.The overall objective is to implement

an efficient inspection and maintenanceroutine which is cost-orientated and allowsthe crew to conduct a thorough examina-tion rather than just ticking a check boxdue to time constraints. We at DNV wantto help you to achieve this objective.




BETTER THAN EXPECTED


Dry bulk market – better than expected

At the beginning of last year, no one expected anything but a collapse of the dry bulk sector.Owners of bulk carriers were pulling their hair out, trying to figure out what was happeningto the market. By that time, everyone already knew about the financial crisis but nobodysuspected that it would pretty much stop the entire market. Freight rates fell sharply, whileanchorages around the world were instantly filled up with unemployed vessels. According to

LMIU, 1,002 bulk carriers were idle in January 2009.

TEXT: JAKUB WALENKIEWICZ

Although very few people were willing tobet money on bulkers, it later turned outthat they were right! An interesting combi-nation of factors has propelled the drybulk market which, even though it nolonger offers rates in the 2007/2008range, is still performing considerably bet-ter than expected. Yet again, everyone’s eyes were turned

to China. Substantial increases in its im-ports of iron ore and steam coal not onlyoffset other countries’ cutbacks but alsoled to a 1% increase in the world’s majorbulk seaborne trade. This had a very posi-tive effect on the VLOC, Capesize and alsoto some extent Panamax rates. Smaller bulk carriers unfortunately had

to sail through rougher seas. According toClarkson, the minor bulk seaborne tradecontracted by 11% last year, which keptfreight rates depressed. However there arenow signs of improvement which, com-bined with extensive scrapping and a rela-tively modest order book (compared tolarger bulk carriers), has already led to

higher rates within both the Handysizeand Handymax segments.A few other factors have also helped

the market. All of them reduced the sup-ply of vessels and thus better adjusted themarket to the overall lower demand.Port congestions decreased the avail-

ability of ships in the market. A combina-tion of slippage, delays and cancellationsof new contracts resulted in only 65.1 mil-lion DWT of bulk carriers (instead of thescheduled 119) hitting the water last year(Clarkson). According to DNV Market In-telligence, 388 bulk carriers – correspon-ding to 18 million DWT – have been can-celled since the market crashed. There is still a positive sentiment in the

market. Newbuilding prices have fallen byan average of 40–50%. Steel prices are ex-pected to rise, which is likely to drive new-building prices up again. Such develop-ments attract owners (especially assetplayers) to place new contracts with yards.According to IHS Fairplay, 125 bulk carri-ers (corresponding to 9.9 million DWT)

were contracted within the first fourmonths of this year. This is a significantimprovement, especially when comparedto the beginning of last year, when thecontracting activity was almost non-exis-tent.DNV has managed to secure 33 new

bulk carrier contracts (1.9 million DWT).This represents 26.4% of the number ofnew bulk carriers contracted in 2010. Inaddition, another eight existing DNV con-tracts were converted from productstankers to bulk carriers.


Market decoupling for dry bulk vessel sizes?

Remarkable differences in freight rate developments for the largest and medium-size bulk carriers have been observed in recent months. In mid-April, the spotrates for Panamax and Supramax were higher than for Capesize. Whereas theCapesize spot rates had dropped 50% since the end of November, Panamax and

Supramax rates were up 7% and Handysize rates were up 18%.

TEXT: JARLE HAMMER, HM STRATEGIES

A comparison of spot rate levels on 18May with end of November levels showsthe following developments: Capesizedown 27%, Panamax up 20%, Supramaxup 25% and Handysize up 32%. The nor-mal strong market correlation with paral-lel rate developments for the different ves-sel sizes seems to have been broken, atleast temporarily. Whether this heralds anew pattern of more independent rate de-velopments remains to be seen, but thereare some arguments supporting such achange. While the largest vessel sizes arebasically serving just the steel industry andto a much smaller extent coal-fired powerplants, there is a multitude of commoditytrades with very dispersed trading patternswhose shipment volumes and logistical re-strictions make it difficult to accommo-date larger vessels sailing with either partcargoes or pooled cargoes. Similarly, econ-omy of scale disadvantages limit smallervessels’ participation in iron ore and coalshipments.The dry bulk freight market has gener-

ally developed more strongly than ex-pected over the past few months. The

market has clearly been supported by verystrong slippages, which last year corre-sponded to as much as about half of thescheduled deliveries at the beginning ofthe year. At the same time, economicprospects are improving and the steel in-dustry is now showing significant recoveryin most countries. Global economic prospects have con-

tinued to improve although some Euro-pean countries are in deep economictrouble and the overheating in Chinagives reason for concern. The latest re-ported figures for 12-month changes in in-dustrial production in leading countriesare as follows: the USA up 4.0%, the Euroarea up 6.9%, and Japan up 30.7% fromthe very dismal level one year ago. Chinahas reported impressive growth of 17.8%and other countries doing remarkably wellare India, Vietnam, and Malaysia, all uparound 14%. The steel industry, which ac-counts for about half of the total dry bulkcarrier demand, is showing clear signs ofimprovement after the dramatic declinesin late 2008. World crude steel productionin March was 30.6 % higher than in the

same month last year and world pig ironproduction, which requires iron ore andcoking coal, was up 28.8%. Countrywisepig iron production in March comparedto one year before was as follows: Chinaup 19.6%, Japan up 52.6% and the EU up64.3%. Here, it should be observed thatthe comparison is still against an ex-tremely severe slump in Japan’s and theEU’s output following the financial crisisin late 2008. China’s pig iron productionin April was 23% higher than in the samemonth last year.

Imports of key raw materials to Chinahave continued at high levels in recentmonths. Although the country’s iron oreimports slipped from 158.7 million tonnesin 4Q 2009 to 155.0 million tonnes in 1Q2010, this volume was still about 18%higher than in the first quarter last year.Iron ore imports in April were 3% lowerthan one year ago. Last year, China’s ironore imports rose by a staggering 41.6% tosome 628 million tonnes, while domesticproduction of low-grade iron ore was up6.8% to about 880 million tonnes. Whencomparing iron ore availability in China

MARKET DECOUPLING FOR DRY BULK VESSEL SIZES?


with the country’s pig iron output, whichdecreased by 0.5% in 2008 and increasedby 15.9 % in 2009, it seems that there hasbeen a giant iron ore stock building overthe past two years in ports and at steelmills and mines, estimated to be around190 million tonnes. Chinese importershave benefitted from poor world marketsand soft prices and are now in a strongerposition in price discussions with ex-porters. In this context, it was recently ru-moured that China would ban low-gradeiron ore imports from India. However,India is a significant supplier and importsfrom this country last year amounted toabout 108 million tonnes, or 17% ofChina’s total iron ore imports, after Aus-tralia and Brazil which accounted for 42%and 23% respectively. China has givenlarge-scale support to domestic infrastruc-ture projects, largely counterbalancing thecountry’s strong drop in exports of steelproducts from 78.2 million tonnes in 2008to only 23.1 million tonnes in 2009. Onthe other hand, imports of steel productsto China increased from 15.6 milliontonnes in 2008 to 22.2 million tonnes in2009. Chinese steel exports have shown amoderate recovery in the first part of 2010.Here, it should be observed that China ex-ports a lot of steel in finished industrialgoods.The World Steel Association has just re-

leased its half-yearly Short Range Outlook.World steel demand is estimated to havedecreased by 6.7% last year, after a de-crease of 1.4% in 2008. The WSA foreseesa growth in world demand of 10.7% thisyear to be followed by a more modest, al-beit still solid, growth of 5.3% in 2011.China is estimated to have seen a remark-able growth of 24.8% last year. This highgrowth figure must be compared to a quitelow growth rate of just 2.9% in 2008. Forthe next couple of years, the WSA nowforesees comparatively modest growth inChina’s steel demand of 6.7% in 2010 andjust 2.8% in 2011. After a large decrease of24.5% in 2009, steel demand in the worldexcluding China is expected to grow bythe comparatively high rates of 14.4% thisyear and 7.4% next year. China’s coal imports more than tripled

from about 41 million tonnes in 2008 to127 million tonnes in 2009, while the



country’s coal exports were about halvedfrom 41 million tonnes to 20 milliontonnes. Coal imports to China in 1Q 2010of 44.4 mt were up 11% compared to thepreceding quarter and up as much as227% compared to 1Q 2009. It should beobserved that India has now also entered

a period of strong expansion in its coalimports. In fiscal year 2010, which endedin March, India imported some 70 milliontonnes of coal, twice the volume in fiscalyear 2009. Substantial port expansion pro-grammes are being implemented in orderto accommodate larger vessels and reduce

severe congestion for the smaller shipsnow used for the country’s coal imports.In addition to the recovering steel indus-try and hefty thermal coal demand inmajor countries, the brisk River Plate sea-son for grain and soybean exports is alsoproviding solid support to the freight mar-ket for Panamax, Supramax and Handy-max vessels. The Capesize market seemsto be more nervous due to its almost totaldependence on the tactical and strategicactions of Chinese steel importers. Largeiron ore stocks may to some extent lowershort-term import volumes.During the first four months of 2010,

the dry bulk fleet increased by 3.2%. Ac-cording to Fearnresearch, the world bulkcarrier fleet stood at 474.9 mdwt at the be-ginning of May, while the order bookstood at 268.3 mdwt, corresponding to56.5% of the existing fleet. Scheduled de-liveries now amount to 22.7% of the pres-ent fleet for the last eight months of 2010,and as much as 20.9% for 2011 and 10.2% for 2012. It remains to be seen howlarge slippages will be this year. Last year,as much as 51% of scheduled deliveries atthe beginning of the year were postponed.During the first four months of 2010, neworders totalled 13.6 mdwt, down from 15.6mdwt in the preceding 4-month period.The main newbuilding focus shifted fromCapesize to Panamax and Supramax sizes.Demolition sales were almost negligible at0.5 mdwt in the same period. A closer look at size ranges shows very

large differences in order book shares.Thus, at the beginning of May the

order book for 10–50,000 dwt ships cor-responded to 20% of the existing fleet(with 6% for 10–25,000 dwt, 38% for 25-40,000 dwt and just 2% for 40–50,000dwt). Going up in sizes, it appears thatthe order book share for Supramax of50–60,000 dwt was as high as 96% of theexisting fleet, while the share for Pana-max/Kamsarmax of 60–100,000 dwt was49%. Among larger sizes, small Capesizeof 100–150,000 dwt had an order bookshare of 49% of the existing fleet, whilelarge Capesize of 150–200,000 dwt had ashare of 72% and the order book sharefor Very Large Bulk Carriers over200,000 dwt was as high as 100%. For allvessels above 100,000 dwt, the order



book stood at 75% of the existing fleet ofsuch vessels. Looking ahead, the enormous over-

hang of tonnage to be delivered will – de-spite further delays and cancellations oflate deliveries – be hard to balance by ton-nage demand growth and most peopleseem to agree that the tonnage balance isbound to deteriorate over the next coupleof years. On 18 May, the Capesize spotrates averaged about USD 46,000 per dayand Baltic Exchange Forward Assessmentswere at about USD 27,000 for calendaryear 2011 and USD 25,000 per day for cal-endar year 2012. Panamax spot rates stoodat about USD 34,000, with forward assess-ments at USD 20,000 for 2011 and USD18,000 for 2012. Supramax spot rates wereat about USD 32,000, with forward assess-ments at USD 18,000 for 2011 and USD16,000 for 2012. Handymax spot ratesstood at USD 21,000, with forward assess-ments at USD 14,000 for 2011 and USD13,000 for 2012. In comparison, reportedtimecharter levels were significantlyhigher, with 1-year rates at USD 37,500 forCapesize, USD 30,250 for Panamax, aboutUSD 24,750 for Supramax and USD21,500 for Handymax. Indications for 3-year rates stood at USD 30,750 for Cape-size, USD 21,000 for Panamax, USD18,250 for Supramax and an estimatedUSD 16,500 for Handymax. Such levelsallow for interesting second-hand pur-chase and chartering business.The future rate quotations clearly re-

flect concern about the forthcoming ton-nage supply. At the same time, if they ma-terialise, such healthy rate levels way abovethe vessels’ operating costs would not in-duce much scrapping. There will mostlikely be significant market volatility in thenext couple of years, with some waves ofscrapping in between. Even if we shouldsee the same high degree of slippages innewbuilding deliveries as last year, to-gether with more cancellations and someconversions of orders to other vessel types,obviously a nominal dry bulk order bookof 56% will continue to dampen marketprospects. On the other hand, the energy-hungry and very coal-focused giant twin-engine, China and India, may well con-tinue to provide positive surprises on thetonnage demand side.



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have been ordered to DNV class by Owners that recognise the advantage of DNV’s follow-up during construction

and the benefits of being supported by a quality provider of classification and advisory services during the

operational phase. The bulk market is growing, and at DNV we will help you achieve your high standards.

Reach your high standards

bulk carrier update no. 1 2010

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