economic imperatives - imo
TRANSCRIPT
IMO Seminar 10 June 2013 17/06/2013
Martin Stopford, President CRSL 1
IMO Seminar : The Future of Ship SafetySession 4: The Driving Forces on Maritime Safety
London, 10th June 2013
EconomicImperatives
Martin StopfordPresident,
Clarkson ResearchFuture
safetyofmaritim
eIndustry
IMO Seminar 10 June 2013 17/06/2013
Martin Stopford, President CRSL 2
1. Regulatory economic model2. Key economic drivers for future3. Example, single hull phase out4. Conclusions for maritime safety
IMO Seminar 10 June 2013 17/06/2013
Martin Stopford, President CRSL 3
1. Shipping plays a central part in the world economy.2. The Stakeholders are central to the regulatory process
Is that a newregulation on the
horizon?
IMO Seminar 10 June 2013 17/06/2013
Martin Stopford, President CRSL 4
Investment Model: A massive job ahead
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Billio
nto
nnes
ofca
rgo
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15 Bn tonnesIn 2030??
Japan
China
The riskshipowners
take
Replacedinvestm
entTrading
$1.3 Trillion investmentneeded by 2030 to carryworld trade safely (roughly)
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Transport Model: industrial stakeholders
AIR FREIGHTBULK SHIPPING LINERSPECIALISED SHIPPINGLarge parcels, low value Smaller parcels, high value
COMPANIESMajor market for energy,buildings, capital goods and
Consumables
POWERGENERATION
Power stations are major usersof oil, coal and gas, oftendealing direct with the primarysuppliers
CONSTRUCTIONUses steel, timber products,NFMs•Residential, Commercial•Infrastructure
TRANSPORTMajor user of energy, vehicles& infrastructure (Cars, rail & air
travel, ships)
CONSUMERSThe final market, but
shipping industry has littledirect contact except cruise
& ferry
END USERS
END MARKETS
RETAILERS
MIningMetal ores•Iron ore,•Scrap steel•Manganese ore•Bauxite, Alumina•NFM OresMinerals•Salt, Sulphur, Limestone•Sand & gravel
AGRICULTUREDry Cargo•Grain, Oilseeds & cake•Animal feeds n.e.s.•Rubber, SkinsRefrigerated•Fruit & vegetables•Meat & fishLiquid•Oils, Wine, Fruit juices•MolassesLive Animals
FORESTRY•Logs, Lumber•Wood chips
RAW MATERIALSENERGY
•Oil,•Gas (LNG LPG)•Coal & coke•Molten sulphur, Bio fuels
Liquid BulkCoal, coke,crude oil &
Gas
Dry BulkAgriculturalmaterialsand forestproductsshipped toconsumingmarkets
LiquidVegetableoils & fats
Dry BulkMetal ores,metal scrap,
crudefertilizers,
salt
Unit loadLogs,
lumber,paper, pulp
Sea TransportOIL REFINING
•LPG, Naptha, Gasoline etc
STEEL•Pig iron, & products
CHEMICALS•Organic & Inorganic
TEXTILES, SHOES &CLOTHING
FOOD PROCESSING•Meat, dairy, sugar etc
WOOD & PAPER•Pulp & Paper
PROCESSIN
G
MANUFACTURING
MOTOR VEHICLES•Cars and trucks, tractors
LIGHT ENGINEERING•White & Electrical goods
manufacturingManufactured goods &
materials shippedto manufacturers
Liquid BulksLiquid
products ofoil refiningand chemicalprocessing
General CargoManufacturedproducts of alltypes shippedto companiesand private end
users
Sea Transport
IMO Seminar 10 June 2013 17/06/2013
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1. Ship owners
What should I doabout emissionregulations?
5. Governments
How willregulationsdeal withfuturechange?
4. Financiers
Could I have aloan to financemy fleet ofecoships?
“We want tobuild our own
feet"
3. Shippers2. Shipbuilders
We build shipsand we canmake them
more efficient
Decision Model: The key stakeholders
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2. Offshore OilMobile structuresSupply ships
7,158
Containerships
Gen cargo
Reefer ships*
Heavy Lift*
Ro-Ro*
Multipurpose
Barge carrier*
1.1 General Cargo25,784
Designs
• Non Cargo23,859
Tugs
Fishing boatsPassenger ships
Dredgers
Designs
Bulk carrier
Chip carrier
Open hatch*
Ore carrier
Vehicle carrier*
1.2 Dry Bulk6,631
Cement carrier
Designs
Combined Carrier
Crude tanker
Chemical tanker*
Products tanker
1.3 Oil & Chemicals11,250
Designs
GROUP
SECTOR
SHIPTYP
E
* Indicates specialized ship type
LPG*LNG*
1.4 Liquid Gas1,317
1. Cargo ships47,433
Designs
Merchant Shipping74,398 vessels
Research ships
2. Offshore OilMobile structuresSupply ships
9,974
Containerships
Gen cargo
Reefer ships*
Heavy Lift*
Ro-Ro*
Multipurpose
Barge carrier*
1.1 General Cargo28,403
Designs
Non Cargo
Tugs
Fishing boatsPassenger ships
Dredgers
Designs
Bulk carrier
Chip carrier
Open hatch*
Ore carrier
Vehicle carrier*
1.2 Dry Bulk9,568
Cement carrier
Designs
Combined Carrier
Crude tanker
Chemical tanker*
Products tanker
1.3 Oil & Chemicals13,089
Designs
GROUP
SECTOR
SHIPTYP
E
Source: Maritime Economics (2009) Figure 14.1 updated from Clarkson World Fleet Register 1/3/2013
LPG*LNG*
1.4 Liquid Gas1,317
LPG*LNG*LPG*LNG*
1.4 Liquid Gas1,622
1. Cargo ships53,286
Designs
Merchant Shipping87,119 vessels
Research ships
Ship Type Model: Many Different Designs
Value $809 Billion March 2013
IMO Seminar 10 June 2013 17/06/2013
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Company Model: Shipping companiesare prime movers & most are small
No Ships Number of % fleet Ships perin fleet Companies # Ships (No. of ships) companyOver 200 10 4,074 11% 407100-200 22 2,754 7% 12550-99 80 5,538 15% 6920-49 256 7,520 20% 2910-19 460 6,211 17% 145-9 669 4,389 12% 7
Under 5 4,021 6,417 17% 2Grand Total 5,518 36,903 100% 7
Includes deep sea vessels, including bulk, specialised and linerSource: CRSL
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Techno-Economic Focus• Shipping model is dominated by a widerange of stakeholders (people)
• Regulatory economics provides theframework & should take account ofeconomic consequences for stakeholders
• Focus might include:-– Commercial market consequences– Interest of investors and charterers– Specialized market segment needs– People & company “friendliness“
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What economicissues today?
1. Regional cargo volumes2. Shipping cycles3. Foreign flag registration4. The cost revolution5. The information revolution
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Driver 1: Trade patterns will change
17/06/2013 ©Martin Stopford 11
0.20
0.6
0.8
3.80
6.30
7.50
0 1 2 3 4 5 6 7 8 9 10 11 12Tonnes of sea imports per person a year in
2010
Japan
Europe
N. America
China
S America
Africa
1950-2000OECD’s 1.3 billion
population
2000-20506 billion Non-OECDpopulation want to
consume at OECD levels
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ClarkseaIndex$000/day
(Clarksea Index is a weighted average of earnings bytankers, bulkers, containerships & gas.) 2004
$39,000/day
2008$50,000/day
Here
$22,800/day
2000$24,000/day“Wow”
$8,500/day $12,000/day$14,000/day $9,938/day
Driver 2: Shipping cycles will continue
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Driver 3: Flag/ownership will be an issue
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198919901991199219931994199519961997199819992000200120022003200420052006200720082009201020112012
Foreign Flag
National Flag
National & Foreign Flag Fleets M GTIn 2013 1 billion tonnesof ships will operateunder a “foreign” flag
NATIONAL FLAG
FOREIGN FLAG
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Driver 4: The ship cost revolution
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Bunker cost 1 Year TC Rate
2005Ship costs3x fuel
2012Ship costshalf fuel
Based on Aframax tanker, 1 year TC rate and Rotterdam bunker price
FUELSHIP
$ per day
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Driver 5: The information revolution
Fibre optic cable network
GordonMoore
Invented “Moore’s Law”
• Massive potential for information about ship activities• New applications will require regulation (e.g.reduced manning levels )
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• The Exxon Valdez incidenttriggered new regulations.What lessons?
• The Valdez incidentresulted in regulations tophase out single hulltankers by 2010
• It laid down the precisedesign of double hullrequired
• Implementation was leftto the market. How did itwork out?
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Single Hull Tanker Phase Out
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Million Dwt
Double HullSingle Hull Fleet
ExxonValdes1989
US OilPollutionAct 1990
MARPOL1992
amendments
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Single Hull Tanker Phase Out
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Number ofships
removed
Bulker Offshore Scrapped
convertedto bulkcarriers
Convertedto offshorestructures
scrapped
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Age of VLCCs Demolished
02468101214161820222426283032
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Average Age ofVLCCs
Scrapped
NODE
MOLITION
NODE
MOLITION
25 year life “norm”
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Summary of Double Hull
1. Phase out completed on time2. Design was specified as a result of
working parties, so little confusion overspecification
3. Concerns over early removal of youngerships proved groundless
4. The industry developed its own strategyof scrapping older ships and convertingyounger ones
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1. Investors will spend $1.3 trillion on new(safer) ships by 2030
2. Shipping regulations operate in aneconomic framework driven by people
3. A checklist of the economic/marketconsequences for STAKEHOLDEERS ofregulatory changes would help PLANimplementation
4. Several economic drivers today are likelyto have regulatory consequences
5. The single hull phase out suggestseconomic review can give good results
Independent Shipownerstake risks nobody elsewants to take. Regulatorscan help them to manage
these risks.