insight issue 5 sept 2012

Global implications of urbanisation

Inside•Energyefficientships•Larsen&Toubro’smission•Watersupplyissues•Storingrenewableenergy•Railassetmaintenance•Asiacarbontrading•FocusonSingapore•WorldOceanCouncil

insightTheLloyd’sRegisterGroupmagazine Issue 5 September2012

Inside Issue 5:Contents in full:2 Urbanisation3 Welcometothecity9 Amissiontocreatevalue:interviews

withLarsen&Toubro’sseniormanagement,includingChairman,AnilManibhaiNaik

12 Undergroundmovement:howcantheurbanmetromeasureupinthe21stcentury?

14Singapore:anurbanisationsuccessstory16Globalfoodchallenge19Water:thenewcarbon?22Fromcompliancetoperformance:

ALcontrolLaboratories25Averymodernfleet:PolysHajioannou,

CEOofSafeBulkers27Shippingfocusedonmoreefficientfleets28Bottlingnature’sforces:howcanwe

storerenewableenergy30Thereturnoftheblackrock:willcoal

fuelthefuture?32 Cruise–forgingahead:ChristineDuffy,

PresidentandCEOofCruiseLinesInternationalAssociation

34Stewardsoftheseas:PaulHolthus,WorldOceanCouncil

36Valuegenerator:ProfessorLeovanDongenofNedTrainandUniversityofTwente

39Businesssurvival:thevalueofindependentthird-partycertification

42ThegrowthofcarbontradingschemesinAsia

2UrbanisationThecityisthefuture–itbringsbothnewpossibilitiesandchallengesfordevelopment

9Mission to create valueLarsen&Toubro’sseniormanagementdescribethecompany’stransformationandthechallengesofurbanisation

22Compliance to performanceALcontrolLaboratoriesmakestheconnectionbetweenstrategicgrowthandcertifiedmanagementsystems

25A very modern fleetPolysHajioannou,CEOofSafeBulkers,talksaboutthechallengesofmodernshipping

36Value generatorProfessorLeovanDongenofNedTrainwelcomesrecognitionoftheimportanceofprofessionalassetmaintenance

Lloyd’s Registerworkswithbusinessesandorganisationsaroundtheworldtoenhancethesafetyoflifeandpropertyatsea,onlandandintheair.Wehelpourclientsfacetoday’schallengesandplanfortomorrowandbeyond.

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Copyright©Lloyd’sRegisterGroupLimited2012Allrightsreserved.

ThemagazineisproducedbyGroupCommunications,designedbyC o n r a n D e s i g n g r o u p

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Editor:KathyDavis

[email protected]+44(0)2074232654www.lr.org

Thestatisticsabouturbanisation,populationgrowth,thenumberofpeoplemovingtowardscentresofpopulationneartheseaandtheshortageoftraditionalhydrocarbonresourcesareallwellknownandofincreasingconcernforgovernments,urbanplannersandsocietyasawhole.Globalisationisbothanopportunityandathreatinpreparingourselvesfortheinevitableconsequencesthesechangeswillbring.Itcontinuestoaddpressuretoglobalshippingandinfrastructure.

Whileonedoorcloses,anotheropens.ThedeclineinnuclearpowerconfidenceasaresultofFukushimacoincideswiththeadventofshalegasasamainstreamresourcethatcouldchangethesocio-politicallandscapeoftheworld.Increasingly,globalthinkersareconvincedthatwatershortages,ortobemoreprecise,distribution,isbecomingmoreofathreattosustainabilitythanenergyresources.

Allthisishappeningwithinthecontextofanincreasinglyunstablefinancialworldbringingrecessiontomanycountriesandregions.

Thereislessmoneyinthehandsofgovernmentandyetanincreasinglyageingpopulationtosupportintermsofhousing,healthandadditionalleisuretime.Certainindustries,suchasthecruiseindustry,arebenefitingfromthechangeindemographics.Thesameistruefortherailindustry;mainline,subwaysandmetrosmaintainaphenomenalopportunityassociety’sdemandforcheaperandmoreeffectivepublictransportincreases.

ThiscopyofInsightlooksattheseissuesandaimstoprovokethoughtinourreadersastothelikelyimpact,thesolutionsandtheopportunitiesandthreatsfortheirownbusiness.

Lloyd’sRegisterisproudtobeinvolvedinallthesectorsthatneedtobeefficientforsocietytobesustainablein2030andbeyond.Ourstraplineof‘LifeMatters’saysitall.Ihopeyouenjoyourlatestissueandifyouhavecommentsorwouldliketocontributetofutureeditionsthenpleasekeepintouch.

Welcome To our latest issue of Insight.Richard Sadler, ChiefExecutive

Insight September20121

Urbanisation Peoplehavebeenmovingfromruraltourbansettlementsforcenturiesbutthepaceofthatmovementhasincreasedrapidlyinthelast60years.Nowwehave3.6billionurbandwellers(overhalfoftheworld’spopulation)withestimatesofthisreaching70%by2050,accordingtoUNfigures.

InLatinAmericaalreadyeightoutof10peopleliveincities,settoriseto90%by2050.Otherdevelopingregions,includingAfricaandAsia,arestillmostlyruraltoday,butwillhavemorepeoplelivinginurbanratherthanruralareasby2050.

Alongwithindustrialisationandthegrowthofmarkets,urbanisationisoneofthemainforcespropellingeconomicgrowth,aswitnessedinChinaandSingapore,anurbanisationsuccessstorydescribedonpage14.Urbanisationhasbroughtadvantagestonationaleconomiesandopportunitiestoimprovepeople’swell-being,forpovertyreductionandforthepromotionofsustainabledevelopment,butitalsobringsseriouschallenges.

Planningiskey,aviewendorsedbyIndia’sLarsen&Toubroseniorexecutivesonpage9.Citiesneedurbanjobs,housing,energyandinfrastructuretomitigateurbanpoverty,expansionofslums,adeteriorationoftheurbanenvironmentandnaturaldisaster.InAugust2010,a60-miletrafficjamstoppedahighwayoutsideBeijingfor11days.Anefficientmetrosystem,asdiscussedonpage12,isessential.

Andcitiesputstressonfoodandwatersupplies.Onpage16welookattheissueoffoodsecurityandthelinkbetweenfoodproductiontoclimatechangeandonpage19atthepressuresontheglobe’swaterresourcesandthechallengetobusinessofensuringasupplytomeetfutureneeds.

Thecityisthefuture–itbringsbothnewpossibilitiesandchallengesfordevelopment.

2 September2012Insight

F orthefirst-timevisitor,thequickestwaytogetthemeasureofTokyoistotaketheexpressbusortraintoShinjukustation,

thecity’smaininterchange.TotheuninitiatedShinjukuisutterlybewildering:everydaysome3.5millioncommuters–asmanyastheentireLondonUndergroundwillcarryoverthesameperiod–calmlypasstoandfromthedozendifferentraillinesthatservethestation.Ithasmorethan200exits.

Theworld’sbusieststationattheheartofitslargestcity.Itshouldbechaos,butitworks:amicrocosmofTokyoitself.

CitiessuchasTokyoareourdestiny:crowded,frenetic,complex.Some38millionpeoplelivehere,anumberthatwillonlyincrease,asindeedwillthepopulationsofeveryothertownandcityontheplanet.ButTokyohasthegoodfortuneofhavingthenecessaryinfrastructureandthemindsetthatwillenableittoabsorbincreasednumbersandcontinuetofunction.Noteverycityhasthatluxury.

Welcome to

Andrew Foulkes looks at the rise of the city and making the most of its opportunities.


Altogether nowIn2008humanitypassedasignificantmilestone.Forthefirsttimeeverwebecameapredominantlyurbanspecies;theUNreportsthat52%ofusnowliveintownsandcities.Ourattractiontothebrightlightsisnottobediscouraged.

Citiesarewhereweareatourmostcreative;placesofexchangethatconnectcontinents,culturesandeconomies.Withtheadvantageofscaleandproximitytheyareabletoprovideeducation,healthcareandemploymenttomillions.

Nowhereistheadvancementofurbanisationmoreevidentthanintheproliferationofthe‘megacities’,ataglooselyattachedtoanycityof10millionresidentsormore.Todaymorethan20settlementsfallwithinthiscategory,agroupthathasgrownfivefoldoverthepastthreedecadesandwilldoubleagainoverthenext20years.TheywillcertainlybeamorefrequentfeatureofsouthandeastAsia,whereanumberofcities,suchasChengduinsouth-westChina,willhitthe20millionmarkbeforethisdecadeisout.

Nowhere has the transition to an urban society been as rapid as in China. In 1980 fewer than 20% of its population lived in the cities, today more than half – around 690 million (twice the entire US population) – are classed as urban. Thespeedofthistransformationisunmatchedinhistorybutcomeswithanequallyunparalleledrangeofenvironmentalandsocialproblems.Asaresult,Chinaisoneofanumberofcountriesexploringtheconceptoftheeco-city.Onlandthatwasformerlynon-arablesaltflatsandsmallfishingvillagesjustoutsidetheportofTianjin,around100milessouth-westofBeijing,theconstructionoftheworld’slargestlow-carbonsustainablecommunityisunderway,withsupportfromSingapore,amodelforurbandevelopment(seepage14).

Experimental‘eco’townsandcitieshavetheirdetractorswhoremainscepticalaboutthefeasibilityofentirecommunities

adoptinglong-termsustainablebehaviours,letalonehowtheconceptscouldtransfertoourolder,constrainedcities.Intruth,manyoftheseshowcasetownsdolosetheirinitialfocusasday-to-daylivinggraduallytakesagrip,butsome,suchasPoundburyinEnglandorMasdarCityintheUAEcontinuetofulfiltheirbrief.

TianjinEco-cityisonadifferentscalealtogether.Withinadecade,itisexpectedtobehometo350,000people.Around70%ofdomesticrefusewillbesentforrecycling,renewablesourceswillprovideuptoafifthofitsenergyneeds,whileahermeticallysealedpneumaticmunicipalwastesystemwillcuttheamountofrefuseremovedbytrucksbyasmuchas90%.

Carswillnotbebannedbutlow-carbontransportiscentraltothevision,withresidentialareasclusteredalongalandscapedcentralgreenthoroughfarethroughwhichrunsatramserviceandcyclelanes.

Acityabletostartwithacleanslatehardlyoffersarealistictemplatefortownsandcitiestoreplicate,butthescaleoftheplansinTianjindoessetitapart.Ifitsdeveloperscandemonstratethatcommunitiesofthissize–anditisexpectedtobehalfthesizeofManhattan–canfunctionperfectlywellonlessenergy,itwillhopefullyofferinspirationforfutureneighbourhoodsandpresentsomelessonsforcrowded,car-chokedcitiestheworldover.

Mega-eco-city: ChInA

To a bitter end? Muchofthefuturegrowthintheurbanpopulationwillbeoutsidethemegacitieswiththevastmajorityofustobefoundinsettlementsoffewerthan500,000people.Andwhatconcernseconomists,policymakersandstrategiststheworldoveristhattoomanyofoururbancentresarenotwherethenecessaryresourcesare.Thisleadsmanytospeculateontheconsequencesofsomanyofuslivinganurbanexistence.

Withtheirvoraciousappetitesforfossilfuels–andasmass-producersofasphalt,airpollutionandgreenhousegases–citiesarepossiblyalreadytheplanet’sprimarycauseofclimatechange.Paradoxically,manyofourcitieshavethemosttolosefromclimatechange:threequartersofoururbansettlementsarewithincoastalareasatriskfromrisesinthesealevel.

Butwhilekeepingcarbonemissionsundercontrolshouldtoptheto-dolist,formanycityleadersthereisalsothedutytosupportlocaleconomiesandseeliving

standardsrise.Itisoneoftheunwritten‘contracts’betweenthecityanditsresidentsthatitcanbeanexitrouteforthosewantingtoescapepovertyandseekoutabetterlife.

Andthisiswherethenumbersstarttooverwhelm:alreadymorethanabillionpeopleliveinmakeshifthomes–urbanslums–lackinginbasicamenities.Notallinhabitantswillbepoor,manywillhavework,butitisoftenthecity’songoingfailuretoprovidesufficientaccommodation,transportandresourcesthatiskeepingthemthere.Anditiswithintheseenvironments,oftennestledamongaffluentneighbourhoods,wherepovertyconcentratesandwheresocietycanbeatitsmostdesperateanddangerous.

Thisleadspessimiststoenvisageapointbeyondwhichacitycannotsupportitspeople:aninexorabledrifttowardsasocietyallbutcollapsingunderthepressureofitsungovernablesprawlswithpeoplelefttocompeteoverincreasinglyscarceresources.


Nowhere is the advancement of urbanisation more evident than in the proliferation of the ‘megacities’, a tag loosely attached to any city of 10 million residents or more


With intense competition for air supremacy from Frankfurt, Amsterdam, and even Doha, many of London’s business and civic leaders genuinely fear the city’s decline as an air transport hub. HemmedinbywestLondon’ssuburbs,thereisnoroomforHeathrowairporttoaccommodateanymoreflights.Norcanitfindawaytoexpandwithinitsexistingfootprintwithoutrunningintoexhaustivedisputeswithitsneighboursorfallingfoulofitsowncapsoncarbonemissions,primarilyfromtheadditionalroadtrafficmoreflightswouldcreate.

MomentumisbuildingagainaroundproposalsforanentirelynewairportintheThamesEstuary.Theattractionsareobvious:flightpathsovertheseameanfewerhouseholdsaffectedbynoise;fournewrunwaysfitfortheneweraofthesuper-jumbo;

and60%ofpassengersexpectedtoarrivebypublictransportthanks,itisclaimed,tonewhigh-speedraillinks.

Thelocationalsohasaringofsenseaboutit.By2020Londonwillbeexpectedtoabsorbanextramillionresidents,upfromeightmillionin2011.Theareabetweentheproposedairportandtheedgesofthecity,theThamesGateway,haslongbeenmarkeddownforalargeproportionofthenewhousingrequired.Plus,amajornewemployerintheregionwillbewelcomed.

Ifallofthatisnotboldenough,howaboutthis:theproposalsrequirethatHeathrowairportisclosed.EvenacitylikeLondonrequiresonlyoneairporthub,andmuchofthefundingwouldcomefromwhatHeathrowwouldleavebehind:Europe’slargesturbanlandbankallowingforanentirelynewwestLondonneighbourhoodtobebuilt.

Thebenefitsareundeniable,butthereisalongwaytogoyet.Britain’splanningsystemisnotgoodatdigestingbiginfrastructure;anewrunwaytoincreaseHeathrow’scurrentcapacitywasbackedin2002but10yearsofplanningdisputeslateritremainsshelved.Itwillalsotakeaboldsetofpoliticianstomakethecall.Heathrowdirectlyorindirectlysupportsover100,000jobsinthelocalarea.

ButLondonwillhavetodecidesoon.Surroundedasitisby'greenbelt'landwithstrictplanningcontrolsthathavekeptthecity’sfootprintincheck,thenewairportoffersachancetopunchthroughandspreadtowardstheThamesEstuary.

EitherthatorLondonerswillhavetosqueezetogetherevenmore.

Development dilemma: London


Cities have more to offerManyeconomistssuggestthat,thoughunpalatable,thepresenceofpovertywithinthecity–alongwithmakeshiftcommunities,blackmarketsandbackstreetfactories–isalsoasignofasuccessfulcity,onethatstillofferssomething.Peoplechoosetoremainbecause,whatevertheircircumstances,thecitystillgivestheirbestchanceofabetterlife.

Andgovernedproperly,thecitywillprovideitsownsalvation.Asabreedinggroundfornewindustries,technologiesandskills,itcannotonlycallupontheresourcesitneedstoaddressitsfuturechallenges,theycanalsoredefinewhattheywillbe.Thekeyisnotjustshort-termintervention–ataskforcehere,ashoppingcentrethere–butalsoaboutallowingcitiestobebetterpositionedtolookafterthemselves.

Somecitiesgeneratemoreoutputthanentirenationstatesyetlacktheauthoritytodecidetheirownbudgetsorplanninglaws.FewofthegiantAsiancities,forexample,havetheoptiontoraisetaxesorgeneraterevenuefromutilitiesortransportsystems.Planningregulations,oftenenshrinedinnationallaws,continuetorestricttheirabilitytogrow,aproblemLondonfrequentlyexperiences(seeopposite).Thetimecouldbeapproachingtogivetheworld’sleadingcitiesmoreautonomyandgreaterpowerstomanagetheirownaffairs.

Successfuleconomiesalsoneedacontinuoussupplyofskilledlabourandcapableentrepreneurs.Communitiesthatinvestineducationtendtothrive.InhisbookTriumph of the City,EdwardGlaeser,aprofessoratHarvardUniversity,reportsthatforevery10%increaseinthe

proportionofthepopulationwithuniversitydegrees,percapitagrossproductrisesby22%.Moreeducatedpeoplearethenattractedtothosecommunitiesbecausetheywanttoliveandtradewiththosemorelikethemselves,whichinturnnurturesnewenterprise.

Anditisaskilledandknowledgeableworkforcewhichprovidesaplatformtobuildmoreefficientsocieties.Thisstarts,forexample,byfindingwaystoanalyserealtimedataabouttransport,energyandresourceusageandfeeditbackintothesystemtohelpmanagelimitedresources,butitextendsintoallaspectsofcitylife,fromextractingenergyfromwastetocost-effectivemodularconstructiontechniques(buildoffsite,assembleon)oftransportsystems.

Global problems locally tackledStrongergovernance,investmentineducation,technicalinnovation–itwilltakeamixofallthree,andplentymorebesides,tohelpcitiessteerthemselvesoutoftrouble.Butalways,therecipeshouldhavealocalflavour.

AreportpublishedlastyearbytheUK’sInstitutionofMechanicalEngineerssetoutanumberofproposalsthatcanhelpcitiesabsorbtheextrapopulation.Itfoundthatwhiletherewerefewtechnicalbarrierspreventingtheirwideradoption,solutionswerefrequentlyliftedfromonelocationandtransplantedtothenextwithoutfullconsultationorwithouttakingintoaccountlocalspecificneeds,culturesandevengeography.Narrow,‘off-the-shelf’solutionshaveatendencytoreinventproblems:theslumclearancesthatmerelybreakupcommunities,under-utilisedtramsystemsthatdraincityfinances.

Born to surviveThecityhasalwaysfacedscenariosofimpendingapocalypse.

Intheearly1900sLondon’sstreetwerehometoestimated10,000cabspoweredbyhorse.ThisledplannersandengineerstofretoverwhetherLondonandcitieslikeit,suchasNewYork,wouldonedaysoonhavetobeabandonedamidstreetsburiedunderhorsemanure.Yetthecitysawoffthatparticularcrisisandmanyotherssince.

Therealchallengeahead,then,isnottofocusontheworstofthepredictions,butinsteadlooktoextractthemanyopportunitiesthatagrowingcitywillcreate.

Andrew FoulkesisLloyd’sRegister’sTransportationCommunicationsManager.Eandrew.foulkes@lr.orgFollow me@andrewfoulkes_LR

Stronger governance, investment in education, technical innovation – it will take a mix of all three, and plenty more besides, to help cities steer themselves out of trouble.

Facts and figures

seeoverleafp8


6.3bn people willliveinurbanareasby2050

1bn in1804

3bn in1959

4bn in1974

5bn in1987

6bn in1998

7bn in2011

8bn in2025

2bn in1927

Megacities

World population

over 6%ofhumanswhohaveever

livedarealivetoday

Undercurrentfertilityrates,theworld’spopulationwillpass25bnbeforetheendofthecentury

Stoodshoulder-to-shoulder,

Los Angeles (1,300squarekilometres)couldaccommodatethe

world’spopulation

Asat2011,therewere

23 citiesintheworldgenerallyregarded

asmegacities

52%oftheworld’s

populationliveincities<500,000

Urbanisation

1bn people liveinmakeshift

homesinurbanareas

oftheglobalpopulationwillbeinurban

settlementsby2100

75%

75% of urban settlements are at risk from a rise in sea level


Megacitiesaccountforaround

4% oftheworld’spopulation

A MISSIon To CREATE VALUE

Larsen & Toubro’s Chairman, Anil Manibhai naik and other L&T senior executives talk to Richard Cook

about the company’s transformation to become a global giant and the challenges of urbanisation.


It is monsoon season in Mumbai but Anil Manibhai naik, the larger-than-life Chairman of Larsen & Toubro, is not letting the torrential rain outside – or the noise of traffic as the afternoon rush hour begins to swell on the streets below – disturb his flow.“Mymissionhasbeentocreatevalue”saysNaik.“IlaunchedL&T’stransformationaljourneyin1999,whenIbecameCEOandManagingDirector…Ilearnedfrommyfatherthatyougetrespectwhenyouarevalued…Wehavetocreatevalueineverythingwedo.WewillnotstartabusinessthatisnotcentrallyfocusedonbuildingIndia.Therearequickwinsoutthere,plentyoflowhangingfruitbutwewillnotpursuethem.Wewillneverdeviatefromourmissionofcreatingvalue.”

TosayNaikisremarkableisunderstatement.Hewenttoamud-floorvillageschooland,viaasuccessionofscholarships,madesurehegothimselfaneliteeducation.HejoinedL&Tin1965asajuniorengineerintheboilershopandhasbeenwiththecompanyeversince.“ItislikelyIwillreach50yearswithL&TbeforeIfinish”hesays,matter-of-factly.

Naikisopenlydevotedtothecompanyhehasbuiltintoaglobalgiantandisaself-confessedworkaholicwho,formanyyears,workedsevendaysaweek.TodayL&TturnoverisjustunderUS$13billionayearanditemploysaround50,000peoplewhomostlyworkinkeysectorsofIndia’seconomy;construction,power,heavyengineering,shipbuilding,financeandIT.L&TwasinvolvedintheconstructionofIndia’sfirstnuclearsubmarine,isanintegralpartofthecountry’snuclearpowersectorandworksverycloselywithIndia’saerospaceindustry.

Tackling the challengesAttheageof70,Naikfeelshisworkisfarfromfinished.“IamalsonowtheChairmanoftheIndianInstituteofManagement,Ahmedabad.It’sthenumberonemanagementschoolofIndia.AndthereIhaveseenhowhardlyanyonejoinsmanufacturing,heavyindustryorinfrastructure.It’sbanking,financialservices,businessstrategy,brandingandmarketingorIT.”

It’ssomethingthatMadhukarVinayakKotwal,L&TDirector&President(HeavyEngineering),readilyrecognises.“InIndiawecannowproduceanythingbutproductivityisjustonething.Tocompetewiththebestintheworld,wemustproduceasefficientlyasthebestinworld…Thebiggestchallengesareurbanisationofcourse,andmanaginghealth,butit’salsoaroundeducationandemployment.Majorchangesareneededinthewaywemanageourpolicieshere.”

ChairmanNaikcontinueswiththetheme.“ThebraindrainfromIndiaisenormous.Sixoutoftengraduatesleave.Onlyoneandahalfcometomanufacturing.Butwhenyoutalkaboutheavyindustryorinfrastructure,it’shalfoutoften.Thisisworkcrucialtoourcountryandwhoisgoingtodoit?Ithastobetackledsowehavestartedaprogrammethatisdoingexactlythat.Anotherthingthatmustbetackledisthepovertyhere.Indianeedssomuchsocialwork.”Naikscrewshisface,inamixofangeranddetermination.”Actuallytheskyisthelimit…andwearetacklingit.”

Modern urban storyThepovertyNaikspeaksofcanbeseenprettymuchalloverMumbaiwhereL&T’straditionalhomehasbeensince1948,inthenorth-easternfringesofthecityatthemanufacturingcomplexofPowai.ThecorporateofficewhereNaikisspeakingisinthedistrictofAndheri,alsointhenorthernsuburbs.Anareaofafewsquarekilometres,hometoanastonishingfourmillionpeople,AndheriisamicrocosmofIndia’smoderndayurbanstory.Acenturyago,itwasafishingandfarmingvillage.Todayitisanincongruousmixofgleamingofficesandmalls,ancienttemplesandrowuponrowofapartmentblocks.And,morethananything,Andheriisforabout20hoursadayanincrediblemassofhumanityonthemove–incars,buses,mopeds,trucks,cabsandthree-wheelertaxis.PeopledonottalkdistanceinMumbaitheytalktime–insteadofthreekilometrestheysay45minutes(andinrushhourinAndheri,threekilometresin45minutesmightbeoptimistic).

“...the sky is the limit… and we are tackling it”

AnilManibhaiNaik

AnilManibhaiNaik KrishnamurthiVenkataramanan MadhukarVinayakKotwal AnilThapliyal


Bisectingthesuburbistheconstructionworksofanoverheadmetrolinethatwilllinktheinternationalanddomesticairports–bothinAndheri–withthecentreoftownandwill,intheory,alleviatethisdailytrafficchaos.Fornowtheworks’concrete,plantandtrucksjustaddtothedailytrafficproblems.Howeverthishigh,ever-expandingconcretestructure,slowlysnakingitswayacrossthesuburbdoesprovidetemporaryshelterfromthedailydownpoursforthoseforcedtoliveonthestreetsuntiltheygetonthefirstrungoftheurbanladder.

Planning essentialWhileL&T’sexpansivecorporatesocialresponsibilityprogrammesthatNaiktalksaboutwithsuchpassionandconvictionareworkingacrossIndia’scities,L&TisalsoplayingaveryactiveroleinhelpingmodernIndiaimproveitsinfrastructure.

“KeytotheL&Tbrandisthenotionofnationbuilding,”saysKrishnamurthiVenkataramanan,L&T’sMD&CEO.“OneofthebigchallengesthatIndiaisfacingisbasicallythesamechallengethathasbeenseenbyallcountriesthathavemovedfromanagriculturaltoanindustrialeconomy,aslargenumbersofpeoplemovefromthecountrysidetourbancentres.Thechallengeishowtogrownewmoderncities.Thisreallyrequiresplanning.Wearenowseeingsecondlevelcitiesthathavebeendevelopedinaplannedenvironment.ChandigarhisagoodexampleasarethenewurbandevelopmentslikeGurgaonthathavegrownaroundDelhi.ThesehaverequiredmoreimaginationintermsoftheinfrastructurethatconnectsthemandL&Tisplayingaprominentroleinmanyareashere.”

VenkataramanancitesL&T’snewspecialeconomiczoneinChennaithatintegratesacontainerport,ashipyard,andanoffshoreyardbuiltalongsideeachotherinthesamesprawlingpurpose-builtcoastalcomplex.

AnilThapliyal,ChiefExecutive,L&TShipbuildingsaysL&TisusingthisChennaifacilitytoengagethelargestclientsintheshippingworld.“Everythingcanbedoneherebecausewearecommittedtousingtheabsolutebest,”saysThapliyal.“Thereisastate-of-the-artcontainerport,nextdoortothatisashipyard–thatcanbuildanythingfromsubmarinestoFPSOs–andthenthereisacommercialrepairyardthathasoneofthebiggestshipliftsintheworld.It’savastsitethatusesalotofinnovation.Ithasawholelotofpotential.”

“It’safirstinIndia,”addsCEOVenkataramanan,“andfacilitieslikethisaresoimportanttoourfuturesuccess.TheIndianstoryforthelastfive,10,20yearsisagreatstory.Thenextfewyearswillbeastoryofchallenges.Developmentandchangecomesaboutmoreslowlyinademocracy.Youneedconsensusbutalsogoodplanningmechanismsinplace.Weneedtoensurepeopleandinfrastructurelinkeffectively.Landisanissue.Weneedlandfordevelopmentbutwealsoneedtoprotectthefertilelands.Wehaveonebillionpluspeople.Ourlandareaisimportant.”

Venkataramanan,justlikeNaikandKotwal,hascomethroughtheL&Tranksfromtheshopfloorandwillbeenteringhis47thyearofservicein2013.AlsolikeNaikandKotwal,whenhetalksaboutL&Thedoessowithmorethanpassion.Venkataramanansaysqualitypeoplehavebeen,andwillremaintobe,absolutelyessentialtoL&T’ssuccess.“Innovationandworkingwiththebesttechnologyhaveofcoursebeencrucialbut,inaddition,wehavealwaysselectedcompetentyoungpeople,groomedthemtotheL&Tway.Wehaveworkedhardtogivethemgoodleadership,goodvalues.Ourbrandissynonymouswithquality.Andsafetyisofparamountimportance.Butwearealwaysmindfultotreatpeoplewithdignity.Ittakesefforttoretainyoungpeoplebutgreatorganisationsarebuiltwherepeoplestay.”Hepausesforamomentbeforesmilingandleaningforward.

“IhavealwayssaidformostpeopleL&TstandsforLarsen&Toubro.ButformeitwillalwaysmeanLoveandTrust.”Whowoulddoubthim.

Richard CookisLloyd’sRegisterAsia’sCommunicationsManager.E [email protected]

Foundedin1938,Larsen&Toubro(L&T)isatechnology-drivenengineeringandconstructionorganisation,andoneofthelargestandmostrespectedcompaniesinIndia’sprivatesector.L&Thasaninternationalpresence,withaglobalspreadofoffices.L&Tbelievesthatprogressmustbeachievedinharmonywiththeenvironment.Acommitmenttocommunitywelfareandenvironmentalprotectionareanintegralpartofthecorporatevision.

Lloyd’sRegister’sEnergydivisionhasworkedwithL&Tformorethan40yearsandnowallfourdivisionsofLloyd’sRegisterprovideservicestoL&T.


Nextyearmarksthe150thanniversaryoftheUK’sMetropolitanRailway,theworld’sfirstundergroundpassengerrailway.Theoriginalsix-kilometrelineextendedfromPaddingtontoFarringdon,nearLondon’sfinancialdistrict,andofferedan18-minutejourneyongas-litwoodencarriagespulledbysteamlocomotive.

Itprovedaninstantsuccess,carryinganestimated40,000passengersondayone,affordingtheteamsoftrailblazingengineersaquickchancetopatthemselvesonthebackbeforedoubtlesslyhavingtoshootofftodefendtheirprojectagainstthenewspapercritics:“Neitherthelocomotivepowernortherollingstock

attheirdisposalwasatallinproportiontotherequirementsoftheopeningday…thecrowdswereimmense,andtheconstantcry,asthetrainsarrived,of‘Noroom’,appearedtohaveaverydepressingeffectuponthoseassembled,”reportedThe Guardianon11January1863.Somerelationshipswerenevertochange.

Nevertheless,withintwoyearstherailwaywasaveragingamillionpassengersamonth.BytheturnofthecenturytheconcepthadspreadtocitiessuchasParisandNewYorkandsteamhadbeenreplacedbyelectrictraction–theageoftheurbanmetrowasuponus.

nobody does it betterTodaytherearearound180urbanmetrosofvarioussizesacrosstheworld.Notallareinthelargestcities,notallarelovedandnotallarefullyutilised,buttheyaremostdefinitelypartoftheurbanfabric.

Whatcountsasa‘metro’systemisnotuniversallyagreed.Ittendstobeattachedtoelectric-powered,high-frequencyrailwaysoperatingontheirowninfrastructureindependentfromotherrailorstreettraffic,usuallywithlargesectionseitherundergroundorelevated.Thisisopposedtolightrail,tramorelectricbussystems,whichtendtoweavethroughthetrafficatstreetlevel.

Inshort,theymovehighernumbersmorefrequently:metrostendtoberegardedasbeingabletosupportaround50,000toeven70,000passengersperhour,perdirection(pphpd);lightrailaround10–30,000pphpd.

Thoughfarmoreexpensivetobuild,withsufficientlevelsofpatronagetheytendtobemorecost-effectivetooperateand

By the end of the 20th century the urban metro had lost its glamour. How can it continue to measure up in the 21st, asks Andrew Foulkes.

Undergr und m vement

London 1863


maintainandcanreachintooutlyingsuburbs.Theyhavealsotendedtobeheldinhigheresteembycivicleaders–justseehowmanycitieshaveexcitedlybidforfundingforashinynewmetro,onlytoloseinterestaltogetherwhentoldtoconsiderguidedbusesinstead.Expensivemistakeshavebeenmadeinthepast,wherethemetroislessanintegratedtransportproviderandmoreofamarketingploy.

numbers gameSimplyput,anundergroundmetrocosts:constructingahigh-quality,double-trackroutebeneathacity,whichwillinvolvereshapingexistingsubterraneanutilitiesandcables,canstartataround£100millionperkilometre.

Thatmeansmetrosneednumbersinordertorepayinvestment:linearrouteswithpopulationcatchmentsroughlyeverykilometrethatcanprovidesufficientdemandovera20-hour-dayoperationaltimetable.Butpredictingpassengerdemandisanartforminitself,involvingcomplexsoftware-drivenmodellingbasedonextensivesurveyingoflocalresidents’travelhabitsandpotentialtoswitchmode.

Eventhen,veryfewsystemsintheworldcovertheiroperatingcostsfromthefareboxalone–meaningmanycontinuetodemandgovernmentfundingtomaintainservicesandupgradesystemsovertime.Thatcausedmanysystemstoberundown,withmaintenancerationedandpassengercomfortmarginalised.Attheirworst,themetrocametoinheritanunfortunateimageofbeingonlyforthosewhocouldnotaffordtodrivebutalsowillingtotaketheirchanceamidregulardelaysandwell-practisedpickpockets.

Meeting expectationsYetinthisageofrapidurbanisation,anddespitetheinherentriskswithpredictingdemand,managingbuildcostsandthesubsequentoperation,itisunarguablethatthemetrohasnoequalwhenitcomestomovinglargenumbersacrossacongestedcity.

Theyhelpremovetrafficfromthestreetlevel,attractregenerationandinvestmenttoneighbourhoodsandimproveaccessibilityformillions.Furthermore,theyemitnolocalpollutingemissionsanddesignimprovements–suchasrecovering

ChEnGdU 2012

theenergygeneratedduringbraking–aremakingthemincreasinglymoreenergyefficient.

Thechallenge,particularlyonnewsystems,istocontinuetofindwaystoincreasepatronagebypresentingthemetroasthemodeofchoiceforday-to-daytravel.Thatmeansexceedingpassengerexpectationsoverlevelsofcomfort,convenienceandsecurity,suchasimprovementstothestationambience–lighting,cleanliness,passengerinformation,Wi-Fi–allofwhichhelpusersfeelmoreatease.

Butitcouldalsoinvolvetechnologicaldevelopments,particularlyinthesignallingsystem,toimproveservicefrequencyandreliability.ArecentupgradeofLondon’sVictoriaLinereducedserviceintervals(headways)fromjustovertwominutestooneminute45secondsorless.

Transit fit for the 21st centuryTherecentemergenceofcommunications-basedtraincontrolasthestandardsignallingsystemforurbanmetrosoverthepastdecadehasalsoencouragedtheplanninganddevelopmentofentirely‘driverless’systems.Thiscouldhaveaprofoundimpactonhowandwherefuturemetrosdevelop.

Mosturbansystemswouldrelishamovetothisdriverlesstechnologyasservicescanthenberunmorecost-effectivelywiththeflexibilitytoadjustfrequenciesduringsuddenpeaks(suchasattheendofasportsevent)withoutbeingdependentonstaffrotas.Theyreportimpressivefiguresregardingefficiency,reliabilityandsafetyperformanceandhelptopresentanairofmodernitythatcanattractextraclientele.

In2011,theDubaiMetroopeneditssecondlinetobecometheworld’slargestunattendedtrainoperation(UTO)at75kilometres.Itisnowexpectedthataround75%offuturesystemswillbesimilarlyautomated.Therecentretro-fitofParis’sline1toUTOoperationprovedthatevenexistingnetworkscannowseriouslyconsiderconverting.Thiswillalladdtowardsmakingurbanmetrosmoreeconomical,morereliable,morepassenger-focusedandultimately,betterpreparedforthe21stcentury.

Themetromightbeapproachingthegrandoldageof150,butthere’splentyoflifeleftinityet.



Singapore Coming to a city near you?

While the problems of rapid and uncontrolled urban growth – slums, crime, pollution – are all too apparent in cities around the world, if we want reasons to be cheerful about the rise of urbanisation, we could do worse than look to Singapore, says Matt Shinn.

SingaporeisamongthemostdenselypopulatedcitiesonEarth,withmorethanfivemillioninhabitantslivinginjustover700squarekilometres,anarealessthanhalfthesizeofGreaterLondon.

YetaccordingtoaKnightFrankandCitiPrivateWealthreportinAugust2012,thecity-state,whichisacentreforinternationalfinanceaswellashometomanymultinationals,isthewealthiestnationin

theworldbyGDPpercapita.OtherstudiesrankSingapore’sinfrastructureasamongthebestintheworld,withitsroads,portandairtransportfacilitiessecondtonone.Andyetthisisalsooneofthecleanestandgreenestofcities.Clearly,Singaporeisdoingsomethingright.

A history of planningSingaporeisthearchetypeoftheplannedcity,withatraditionofdeliberatedesign

thatgoesbacktoitsfounding,bySirStamfordRafflesin1819,asadeepwaterharbourservingBritishinterestsintheFarEast(themaritimeindustrycontinuestobeanimportantcontributortoSingapore’seconomy–seefeatureopposite).Thecolony’soriginalplancanstillbeseeninthepatternofSingapore’sstreetsandzonallayout.

Today,Singaporedealswiththechallengesthatfacealloftheworld’sgreatcities–


providinghousingandsanitation,dealingwithwaste,helpingbusinessestothrive–inanunusuallycentralisedway,withitsUrbanRedevelopmentAuthoritykeepingatightgriponlanduseinthecity.

Singaporeisseverelyconstrainedbylackofspace,andwhilelandreclamationhasalleviatedtheproblemtosomeextent(addingatleastahundredsquarekilometressinceitwasfounded),thisisstilltheworld’smostdenselypopulatedcountry.Itisacentralaimofurbanplanning,therefore,touselandasefficientlyaspossible.

Singaporeislaidoutasaseriesofpartiallyself-sufficienttownsanddistricts,helpingtotakesomeofthestrainoffthecity’scentralbusinessdistrict.Housingisalmostallhigh-density.Andsincelackofspacerulesoutlandfill,morethanhalfofthecity’swasteisrecycled.

Trafficpollution,meanwhile,isdealtwithbycarefullycontrollingthenumbersofcarsinthecity.Only16%ofSingaporeansownvehicles:doingsomeansfirstgettingaCertificateofEntitlementthroughpublicauction,andthenbeingsubjecttotolls,basedonwhenandwhereyoudrive.Singapore’sMassRapidTransitsystemisahighlyefficientalternative,transportingmorethantwomillionpassengerseveryday.

Exporting expertiseAndaspectsoftheSingaporemodelforurbandevelopmentcouldbecomingtoacitynearyou,asSingaporestartstoexportitsexpertiseinurbanplanning.Forexample,lastautumnsawworkbeginonanew‘eco-city’inTianjininnorth-easternChina,whichisbeingjointlydevelopedbyaSingaporeanplanningteam(seepage4).

TechnicalassistanceissoldthroughtheSingaporeCo-operationEnterprise,launchedin2006todealwithforeignrequeststosharethecity’spublicsectorexperience(itreceivessome10delegationseachmonthfromothercountries),whileUrbanRedevelopmentAuthorityInternational,setuptwoyearslater,dealsspecificallywithrequestsforhelpinurbanplanning.

The role of technologySingaporeisalsolookingtopositionitselfasaleaderinthetechnologiesneededbythecitiesoftomorrow.Thecityhasmade

itselfatest-bedforinnovationswhichbothhelpittomeetitsownchallenges,andcanalsobemarketedabroad.

Overthepastdecade,forexample,SingaporehasopenedaseriesofNEWaterfiltrationplants,which,togetherwithothersthatusedesalinationprocesses,nowmeetnearlyhalfofthecity’swaterneeds.AndtheexpertisethatSingaporeancompanieshavebuiltupthroughtheseprojectshashelpedthemcompeteforworkabroad:inthepastsixyearsover100contractsforwatertreatment,worthsomeUS$5billion,havegonetobusinessesfromthecity.

Andinmanyotherareastoo,technologyinSingaporeisprovidingsolutionstocommonurbanproblems.

Singaporeispioneeringtheuseofcleansolarenergytechnology,forexample,withpublichousingprecinctsacrossthecitybeginningtomeettheirownenergyneedsthroughsolarpower,whilealsohelpingtodevelopnewsolartechnologyspecificallydesignedforthetropics.Singapore’sCleanEnergyResearchProgramme,whichalsosupportsresearchanddevelopment(R&D)infuelcells,windand

marineenergy,biomass,andenergyefficiency,isexpectedtocontributemorethanUS$1billiontoSingapore’sGDPby2015.

Newtechnologyisalsobeingappliedtothemanagementoftrafficpollution.Singaporeintroducedtheworld’sfirstelectronicroadtollcollectionsystemtoregulatecaruseinthecity,especiallyatcertaintimesofday.Singaporeisalsoacentreforstudyofelectric-poweredvehiclesinatropicalenvironment.

A model to follow?ThereismuchinSingaporetoemulatethen:asacitywithoutahinterland,ithashadanunusualdegreeoffreedominmanagingitsownaffairsanddevelopingitsownsolutions.UrbanauthoritiesaroundtheworldmaylooktoSingaporeforideas,perhapswithsomeenvyofthecity’sabilitytoimposetop-downsolutions.

Matt Shinn isafreelancewriterspecialisinginbusinessandfinance.

dynamic maritime R&d cluster Singaporeisaglobalmaritimehub,withstrongeconomiclinksandconnectivitytoallthemajorworldmarkets.ItisdevelopingitsR&Dactivitytostrengthenitsmarineandoffshoresectors.ThisinvolvesstrongR&Dlinksbetweentertiaryandresearchinstitutionsandthemaritimeindustryitself,including:

• CORE.TheCentreforOffshoreResearch&Engineering,setupin2003attheNationalUniversityofSingapore(NUS),hasprofessorshipsendowedbyKeppelCorporationLimited,TheLloyd’sRegisterEducationalTrustandtheMaritimeandPortAuthorityofSingapore(MPA).

• MaritimeInnovation&Technology(MINT)Fund.TheMPA'sR&Dframeworkinvolves:educationandtraining;R&D;test-beddingprototypes;andcommercialisationofproductsandservices.Toimplementtheschemesandprogrammesunderthisframework,theMPAhasestablishedtheS$100millionMINTFund.

• SMI(SingaporeMaritimeInstitute).AjointeffortbyMPA,theAgencyforScience,Technology&ResearchandtheEconomicDevelopmentBoard,withlocalinstitutesofhigherlearning:incorporatedin2011todevelopstrategiesandprogrammesrelatedtotheacademic,policyandR&Daspectsofthemaritimeindustry,withacommittedS$350milliontofundinitiatives.

Professor Yoo Sang ChooResearchDirectorofCOREandLloyd’sRegisterEducationalTrustProfessor.


C reatingasustainableglobalfoodsystemthatwilleradicatehungerisoneofthegreatestchallengesfacingmoderncivilisation.Attemptstofindasolutionhavebeenvariouslycomplicatedbycomplacency,

economics,politics,logisticsandurbanisation;theyarenowbeingmademoredifficult–andmoreurgent–bytheneedtoaddressclimatechange.

“Morefoodisneededfromlessland,withlesswater,usinglessenergy,fertiliserandpesticide,whilenotincreasinggreenhousegasemissions,”SirJohnBeddington,theUKgovernment’sChiefScientificAdviser,tolddelegatesinMayataforumorganisedbytheFoundationforScienceandTechnology.

Simplyput,theglobalfoodsystemisoneofthegreatestemittersofthegreenhousegases(GHG)thatarecurrentlyresponsibleforwarmingtheEarth.

Dependingonwhereyoudrawtheboundariesforthefoodsystem,estimatesoftheamountoftheGHGitemitsvarygreatly.Forexample,accordingtoa2011report,agriculture,which

includestheproductionoffertilisers,‘directlycontributes10%to12%ofglobalGHGemissions;thisfigurerisesto30%ormorewhenlandconversionandcostsbeyondthefarmgateareadded’(The Future for Food and Farming,UK’sGovernmentOfficeforScience).

WithagriculturecurrentlymissingfrommostnationalGHGinitiatives,thereislittledoubtthattheproportionalcontributionfromthissectorwillincrease,accordingtothereport.Whiletherearesomeregions–suchasintheUK–wherethevolumeofGHGemissionsfromagricultureisonthedecline,ingeneral,GHGfromfoodproductioncanbeexpectedtoriseastheglobalpopulationincreases,becomesmoreprosperous,andmoredesirousofforeignorout-of-seasonfoods.

Beyond the farm gateFoodproductionaside,thereisconsiderableenergyburnedpackagingfoodandgettingittomarket,causingemissionsbeyondagriculturalpracticesthatcontributetothepaceofclimatechange.

Ensuring global food security – and ending hunger – has always been viewed as a mammoth task, one which society has largely failed to meet. But recent recognition that it is intimately linked to climate

change has started the clock on finding a solution like never before. Russell Barling explores the challenge.

Global food challenge


AccordingtoDrPeterHolmgren,aformerDirectorofEnvironment,ClimateandEnergyattheUN’sFoodandAgricultureOrganization,thefoodsystemisresponsibleforabout30%ofglobalenergyconsumption,80%ofwhichisrealised‘beyondthefarmgate’.

Withsomuchofthefootprintcreatedoutsidethefarmgatetherewouldappeartobesolutionsavailablebyfollowingtheleadsetbyownersofnon-foodsupplychains;forexample,byembracingthebest-practicesolutionspromotedbyenergy-efficiencystandardssuchasISO50001.Theseincludetransitioningtolowercarbonorbiofuels,findingmoreefficienttransportroutes,andencouragingbetterdemandforecastingtominimisewasteandredundancyatfactories,distributioncentresandretailoutlets.

Butinthefoodsystemthecauseofwastagevariesgreatly,sobespokesolutionsareoftennecessary.Itisestimated30%to40%ofthefoodweproduceisneverconsumed:inthedevelopedworlditiswasted;inthedevelopingworld,thefoodproducedoftendoesnotevengettomarket.

obvious solutions?Totheuntrainedobserver,thesolutionsmayseemobvious:ifpeoplearestarving,whynotgrowmorefood?IfgettingfoodfromAfricatomarketinEuropeisburningtoomuchenergy,whynotencourageconsumerstosourcetheirfoodlocally?

However,localinitiativestoimprovesustainabilitycanhaveglobalconsequencesthatundothemostsensibleofstrategies,nomatterhowlogicalandwell-intended.Theuseofbiofuelstoreduce

carbonemissionsinthefoodtransportchainisagoodexample.“Twobillionpeopledependoneatingthefoodweareusingforbiofuels,”saidDrHolmgren.“Thatisanissue.”

Changingtradingandconsumptionpatternstoencouragepeopleto‘buylocally’alsocanhaveunintendedconsequences.Accordingtothereport,The Future for Food and Farming,aboutamillionlivelihoodsinAfricaaresupportedbyUKdemandforthecontinent’sfreshfruitandvegetables,mostofwhichareperishablessentbyair.ItisestimatedthatmovingproductiontotheUKwouldreduceBritain’stotalemissionsbylessthan0.1%.ButtheassociatedjoblossesmayalsosendtensofthousandsofAfricansbacktosubsistenceliving,encouragingthemtoconvertmoreforeststofarmlands,andreleasingmoreofthenitrousoxideandmethanegaseswhicharethelargestsourcesofGHGemissionsfromagriculture.

Clearly,thetrade-offsofanylocalinitiativesneedtobeunderstoodinaglobalcontext.

Reducing emissionsDespitethecomplexities,thereportsuggeststherearefourwaystogiveimpetustoemissions-reductionactivitiesinthefoodsystem.Onewouldbebycreatingmarketincentivestoreduceemissions;thesecouldincludegrants,subsidies,levies,carbontaxesorcapsandtradeschemes.Secondly,theintroductionofmandatoryemissionstandardsorlimits,bydirectregulation,maychangeproductioncostsandbelinkedwithmarketadjustments.

Athirdwayisadoptinglow-emissionstrategiesthroughmarketpressuresdrivenbyconsumerchoice.Thisrequiresinformed

consumersandsourcesofaccurateandtrustedinformationsuchasemissionslabellingorproductcertification.Finally,therecouldbevoluntary(non-profitdriven)measurestakenbyindustryinlinewithcorporatesocialresponsibility.

Whatisnowevidentisthatfoodsecurityandglobalwarmingareinextricablylinked.EnsuringfoodsecurityhasbecomeaprerequisiteforcommittedactiononclimatechangebecausenodemocraticgovernmentcanintroducemeasurestoreduceGHGiftheyhavesignificanteffectsontheircitizens’accesstofood.

Whilefindingasolutioniscomplex,provingsuccessorfailureinthesearchforglobalfoodsecuritycouldbeveryobvious.Becauseeffectively,ifthereishunger,youdonothavesustainabledevelopment.

Russell BarlingisLloyd'sRegister’[email protected] me@russbarling_LR


More people. There are always more people. But there is no more water.Between1960and2000thepopulationoftheworldgrewfromthreetosixbillion.Itisnowmorethansevenbillionandisforecasttoreacharoundninebillionby2050.Asanabsoluteminimum,thesepeoplewillneedtoeatanddrink.

Theywillalsoneedsomewheretolive.Moreofthemarelivingincities–twomoreeverysecond,accordingtotheUN.Theywantabetterlife:betterfood,betterclothes,moreopportunities.Theywillneedtransportandpower.

Forthepastcenturywaterusehasbeengrowingatmorethantwicetherateofpopulation,accordingtotheFoodandAgricultureOrganization.By2025,waterwithdrawalsarepredictedtoincreaseby50%indevelopingcountries,andby18%inthedevelopedworld.

Water The new carbon?

Considering how essential fresh water is to all life on earth, it is astonishing how little there is – and how little attention we pay to it. But that’s going to have to change, and businesses need to start adapting, reports Martin Beaver.


But still, there is no more water. Although70%ofthesurfaceoftheearthiswateranditfallsfreefromthesky,lessthan5%ofitissuitableforhumanoranimalconsumption,andonly0.6%iseasilyaccessible.

“Yetbecauseeveryoneneedswater,”saysJeremyMann,HeadofGeosciences&TechnologyDevelopmentattheglobalminingcompanyAngloAmerican,“whenyoubuyit,itisnormallypricedatalowlevelthateveryonecanafford.However,thisisunlikelytobethecasein20years’time.”Therefore,hesays,companiesneedtotreatwateras“astrategicallyimportant,non-renewableresource.”Thisisamajorbusinessrisk.Withdemandincreasingandsupplystayingthesame,theeventualconsequencesarenotdifficulttoimagine.

And then there is the impact of climate change.Predictionsofhowandwhereclimatechangewillaffectwatersupplyaredifficulttomakeaccurately.Trytofactorinwhentheimpactswilloccur,andbusinessesarefacedwithahighlycomplexmatrixofpossibilities.

“Shiftsintheavailabilityofwaterareoneofthemainwaysinwhichclimatechangewillmanifestitself,”saysRichardGarner,whoisresponsibleforAngloAmerican’swaterstrategy.ThisisaviewechoedbyUNESCO’sWorldWaterAssessmentProgramme.Meltingicecapscouldseecoastalareassufferfromariseinsealevels,disruptinginfrastructureanddisplacingpopulations.Dryareasoftheworldcouldbecomedrier–orwetter.Orboth.

“Asacompany,weareexpectingvariablesupply,escalatingcostandincreasingregulationofwater,”Garnersays.

Miningisarelativelyvulnerableindustrialsector,beingaheavyuserofwaterandinvestinginassetsthathaveunusuallylongtimescales.Butitisfarfromalone.

“Industriessuchasfood,beverageandapparelfacesignificantrisks,”saysEdwinPiñero,ExecutiveVicePresidentofVeoliaWaterNorthAmerica.Agriculture–whichunderpinstheseindustries–uses70%oftheworld’sfreshwater.

Statisticsrelatingtowateruseareplentiful–thoughnotalwayseasytoauthenticate.Toproduce1kgofbeef,forexample,itissaidtotake13,620litresofwater.Globalproductionofbeefin2010wasmorethan25milliontonnes.Asinglecottont-shirtrequiresaround1,500litresofwater.

But,asPiñeropointsout,theissuesfacingmanufacturingcompaniesrelatenotonlytotheirownwateruse,buttothatoftheirsupplychain–directandindirect.Herethenumbersforessentialitemscanbecometerrifyinglylarge.

Itissaidtotakearound250,000litresofwatertomakeonetonneofsteel–withglobalproductionataround130milliontonnesamonthaccordingtoWorldSteelAssociationfigures.Uptotwothirdsofthiswatermightberecycled.But,asAngloAmerican’sJeremyMannsays,“onceyouhavedestroyedthequalityofwater,itisverydifficulttoreinstateit.”

AccordingtotheUSInstituteofElectricalandElectronicEngineers,‘fossil-fuel-firedthermoelectricpowerplantsconsumemorethan500billionlitresoffreshwaterperdayintheUSalone’.Althoughpowerplantsusewaterprimarilyasa“non-contact,once-throughcoolant,”Piñerosays,“inareasofhighlyvariableorlowavailability,evenindustriesthatusewateronlyforcoolingandthenreturnittotheecosystemcanstillbeatrisk.”

Aswatersupplytightens,competitionforitsusewillincrease.“Companieswillfacetheadditionalriskofhavingtheiraccesstowaterrestrictedbylocalgovernmentswantingtoensureadequatesupplyfortheirresidents,”Piñerosays.“Yetcompaniesmaywellnotknowexactlywheretheirsuppliershavewaterriskexposure.Simplyknowingthereisadequatewaterinyourownecosystemisnotenough.”


So what to do? Can technology solve the problems?Technologycancertainlyhelp,thoughshiftsinweatherpatternsareprobablybeyondmankind’sabilitytosolve.

Therearemegaschemesunderwaythataimtomovewaterfromwetplacestodryones.TheChinesegovernmentishalfwaythroughtheworld’sbiggestwaterdiversionproject,transportingwaterhundredsofkilometresfromthecountry’swettersouthtothedry,heavilypopulatednorth.IndiahasevenmoreambitiousplansforwaterdiversionsthatcouldtotalUS$120billion.

Atalowercorporatelevel,AngloAmericanhasinvestedinadesalinationplantinChilethatwillsecurethefutureofoneofitscoppermines.ButatacostofUS$100million.IthasinvestedasimilaramountintreatingwastewaterfromsomeofitsSouthAfricancoalminestosupplydrinkingwatertoresidentsofanearbycity.Partnershipswithlocalgovernmentsarevaluable.

Thelong-termanswer,forallbusinesses,istouselesswater.However,thisdemandsanappreciationofthestrategicimportanceofwater,dataoncurrentuse,andamethodologyforachievingstrategicgoals.MannsaysAngloAmerican“isnowlookingatitsentireoperation–fromstarttofinish–fromtheperspectiveofwater.”

Could water be the new carbon?Even20yearsagoa‘carbonfootprint’wasnotasignificantelementinmanycompanies’strategicthinking.Butitistoday.

Waterfootprintsmightfollow.Andarealdifferenceisthat,unlikecarbon,“waterissuesarelocalandaccesstoitisaverysensitivehumanrightsissue,”saysPiñero.Thiscouldmakewateranevenmorepotentissue.

“Companiesneedtohaveenoughwater,oftherightquality,attherighttime,intherightplace,”Piñerosays.

Thechallengetheyfaceisensuringthattheydo.

Martin Beaverisafreelancewriterwhospecialisesinhealthandsafety,andenergyindustryissues.

Manufacturing fresh water: desalinationWhere water is scarce, desalination may be the only viable means to provide the water supply necessary to support population growth and sustainable development. The Middle East is the biggest market for desalination, with large-scale programmes also in Australia, Algeria and Spain. China is forecast to become one of the biggest desalination markets.

“Spain is a microcosm of the world’s irregular water distribution; four years ago, Barcelona’s supplies were so low that it imported water by ship,” says Jorge Aldegunde, Lloyd’s Register’s Energy Business Manager Spain. “Consecutive governments have prepared different water plans, changing from a proposal for a big transfer of water from the Ebro River to the manufacturing of 51 desalination plants. Only 17 are so far running at below full capacity and the rest are still to be commissioned. Demand is low as the final price of the water will be around 1.1 €/m3, higher than the 0.3 €/m3 that the agricultural sector can pay.”

Although the costs of desalination have fallen dramatically since the 1980s they are generally still high compared to natural fresh water. Most industry commentators believe costs will continue to fall steadily due to technological advances, improvements in energy efficiency and an increase in the lifetime of desalination plants. And as population growth continues and water availability declines, the price of fresh water will begin to rise, creating the potential for desalination to become more cost-competitive.

As water resources become even more stretched the applications of desalination are likely to increase rapidly. The main trend is the switch from municipal to industrial demand. This reflects, in part, the current high levels of investment going into the energy and mining sectors in regions with limited access to water resources, and water-intensive industries are investing in technologies that help them to use water more efficiently.

This fast-changing industry is continuously developing and current focuses are on reducing energy consumption and impact on the environment.

• Over 300 million people in 150 countries have some or all their daily water from desalination.

• 16,000 plants produce 66.5 million cubic metres a day, 0.6% of global water supply.

• Around 60% of plants treat seawater; other feedwater is estuary water, groundwater and waste water.

International Desalination Association (IDA)


From compliance to performance

ALcontrol Laboratories’ senior management highlights the connection between strategic growth and certified management systems.


sideofthebusiness,oiltesting.“Ourclients–whichincludeoilcompanies–requiretheirsupplierstopossessthesamestandardsasthemselves.Sowithoutacertifiedmanagementsystem,wewouldnotbeabletowinbusinessfrommanyofourmajorcustomers.”

RiskreductionisastrategicobjectiveformostbusinessesandmanyofALcontrol’sclientsdemandcertificationasawayofreducingriskintheirsupplychains.“Managementsystemsareveryimportantinriskcontrol,”saysMikeMcCorkell,UKManagingDirectorFood&Water.“Theyensurethatrisksareperiodicallyreviewedwithclearmitigationplansinplace–anyattempttomanagerisksinanadhocmannerwouldbearecipeforfailure.Managementsystemsprovideaframeworkforaddressingissuesinastructuredway,whichhelpsintheidentificationofpracticalsolutionstomitigatethoserisks,andtherebyservestobuildbusinessresilience.”

driving improved performanceThereisaclearconsensusamongALcontrolmanagementthatastronglinkexistsbetweenmanagementsystemsandimprovedperformance,withalltheALcontrolexecutivesreferringtothebenefitsofmonitoringandthecontinuous

improvementthatisdrivenbymanagementsystems.Thecompany’sexperienceissummarisedbyCutler:“SinceimplementingourEMS,wehaveseenatremendous

improvementinourperformance.Themanagersandstaffcannowseewhatisgoingonandeverybodyknowswhattheyaresupposedtobedoingandwhatimpacttheirworkhasonthekeymetrics.

“Withourmanagementsystem,ifouremployeesseeanydropinperformance,theyautomaticallyputthingsrightwithoutanyneedformanagementintervention.”

AkeycomponentoftheservicesprovidedbyALcontrol’sassuranceprovider,LRQA,is‘themedsurveillance’whichdescribesthe

approachtakenbyassessorstoidentifythekeystrategicissuesaffectinganindividualorganisationandapplyingtheseaskeytargetstodriveorganisationalcomplianceandperformance.

TheALcontrolseniormanagementteamidentifiedsignificantadvantagesfromthisapproachbecauseithelpedthemtodrilldowntotheissuesaffectingtheobjectivesofgreatestimportance.McCorkellreports:“Generally,thebenefitswehaveenjoyedfromthemedsurveillancehavecomefromtechniqueratherthantechnology.Sometimes,thereisanassumptionthatchangewillrequireheavyinvestmentinnewtechnology.However,wehavefoundthatbenefitshavecomefromsimplechangesintechnique;staffengagementhasenabledustochangebehaviouranddeliversomeprettyimpressiveimprovements.”

Energy efficiencyAnotherexampleofhoworganisationalperformancecanbedriventhroughmanagementsystemsisenergyefficiency.Therisingcostofenergycombinedwithincreasedregulatorypressure(suchastheCRCEnergyEfficiencyScheme)andadesireamongmanyorganisationstoreducetheircarbonfootprint,isdrivingafocusonenergyuseandALcontrolisnoexception.AspartofitsEMS,thecompanyhasbeenlookingforwaystoimproveenergyefficiencyforover10yearsandDavidDoherty–HealthSafetyandEnvironmentManagerbelievesthatthisisoneofthewaysinwhichmanagementsystemcertificationhas’providedatenfoldpayback’.

ALcontrolLaboratoriesisanorganisationthatbelievesthatthoroughunderstandingoftheirstrengthsandweaknessesleadstotheidentificationofpotentialareasforcompetitiveadvantage.Thisstrategicapproachtobeingasustainable,successfulbusinessisunderpinnedthroughitsrelianceoncertifiedmanagementsystemsasamanagementtool.

Link to business objectivesALcontrolmanagementbelievesthatthereisastronglinkbetweencertifiedmanagementsystemsandtheachievementofstrategicobjectives.“Ourobjectivesarefirstlytoincreasebusinessandprofitsbuttodosoourobjectivesalsoincludemakingsurewehavegotenvironmental,qualityandhealthandsafetycontrolsinplace,”saysGeneralManageroftheOilTestingDepartment,BobCutler.“Withouthavingamanagementsystem,wecouldnotmonitorwhatwetrytodoandmaintainourperformance.”

IainSwinton,BusinessDirector(UKandIreland)forLand,adds:“Obviously,asanenvironmentallaboratory,weareheavilyfocusedontheenvironmentalaspectsofourbusinessanditisveryimportantthatwebehaveinanethicalmannerwhenitcomestotheenvironment.OurEMSenablesustodothat,andensuresthatweareabletogiveourcustomersconfidencethattheycanrelyonusandthatourenvironmentalcredentialsarespreadacrossthegroup.”

AcertifiedEMSisalsoarequirementofmanyofALcontrol’smajorclients.ThisisparticularlyimportantforCutler,andhis

“...without a certified management system, we would not be able to win business from many of our major customers”

Since being certified to the Environment Management Standard (EMS) ISO 14001 in 2003, ALcontrol has put management systems at the heart of its organisation to drive competitive advantage, employee engagement and strategic performance.


AcommonresponsebyALcontrolmanagementwasthatthemanagementsystemsappeartohave‘takenonalifeoftheirown’.Forexample,McCorkellsays:“Onceouremployeesbecomefullyengagedinissuessuchasenergyefficiency,theystartfindingwaystoimproveperformancethatcouldneverhavebeenimaginedattheoutset.”

Anumberofinitiativeshavebeenintroducedtoreduceenergy.Forexample:atrafficlightsystemenablesstafftoidentifywhichelectricalequipmentcanbesafelyturnedoff;extractionsystemsareonlyoperatedwhenneeded;andstorage

hasbeenreorganisedsothatsomewalk-incoldstorescouldbe

decommissioned.Thesemeasures,combinedwithgoodservicingschedulesandstaffawarenessofenergyusage,sawareductioninALcontrol'senergyconsumptionby17%equatingto

over1.5millionkWhsavedovertwoyears,whichisacostsavingofover£100,000.

Staff engagementAsignificantpartofALcontrol’sbusinessisconductedintheenvironmentalsector,sothecompany’semployeesalreadyhaveahighlevelofenvironmentalawareness.Asaresult,managementfirmlybelievesthatemployeesaremotivatedbythe

company’sEMScertification.McCorkelldrawsaclearparallelwiththepersonallivesofstaffinwhichtheyseektolowertheirownenvironmentalimpact.Asaresult

hesays:“Theyexpecttheiremployertodemonstratethesamevalues.AtALcontrolanumberofchampionsfortheenvironmenthaveemergedwithinthecompany,andthesystemhasbecomeself-perpetuatingaspeoplelooktoachieveobjectivesthatgivethemarealbuzz.Staffengagementcertainlytakesaboostfrompeoplearrivingatworkknowingthattheiremployerdemonstratestheircommitmenttotheenvironmentbyholdingappropriatecertificationfortheenvironmental managementsystem.”

Adding valueItisvitallyimportantfortheassuranceprovidertoaddvaluethroughouttheassessmentandcertificationprocess.Thisisachievedintwoways.Firstly,reputationandcredibilityisimportantifcurrentandfuturestakeholders–whooftenspanmultiplecountries–aretobesatisfiedthatthecompany’scertificationishelpingtobuildbusinessresilience.Secondly,thetechnicalexpertiseoftheassessorwhoconductstheassessmentsmustbehigh.ThiswashighlightedbyALcontrolmanagementwhoallcommentedonboththevalueof“anindependentpairofeyes”andtheadvantagestobegainedfromanexperiencedLRQAassessorwhounderstoodtheirindustryandwasabletoidentifyopportunitiesforimprovementthatwouldbeofrealvaluetothebusiness.

Summarising,Swintonsaid:“Byputtingourmanagementsystemsattheheartofourorganisation,weareseeingtangibleresultswhicharehelpingtoprovidecompetitiveadvantageandbusinessresilience;intoday’stoughmarket,independentmanagementsystemscertificationremainsacompellingpropositionandisextremelyvaluabletotheongoingsuccessofourorganisation.”

E [email protected]

ALcontrol, one of the world’s leading environment and food testing companies, provides analytical services to organisations around the world.

Witharound1,500employeesworkingin30laboratoriesandservicecentresconductingmillionsoftestsperyear,ALcontrolofferstestingandanalyticalservicesforsoil,water,foodandoiltohelpclientsdemonstratecompliancewithregulationsandachievetheirhealth,safetyandenvironmentalgoals.Throughanetworkoflaboratoriesin11Europeancountriesandprovidingsupporttocustomersglobally,ALcontrolaimstobetheleadingenvironmentandfoodtestinggroupinEurope.

ALcontrol believes that employees are motivated by the EMS certification


A very modern fleet

Polys Hajioannou, CEO of Safe Bulkers, is a modern Greek shipowner; an owner managing the challenges

of today and tomorrow, but also a representative of the personal and ‘hands-on’ leadership that has characterised

the legendary tradition of Greek shipping.

Photographer©WillemOldenburg


T herearemanyshipownersofGreeknationalityandtheyhavemanydifferentapproachestobusinessanddifferingpersonal

styles.WhilemodernGreekownersareperhapslesswellknownontheworldstagethansomefamousnamesofthepast,theseareownerswhoarejustassignificantastheirindustryforebears.Theshipownersoftodaymustdealwithabiggerandmorecomplexindustryandthecurrenttechnologicalandinvestmentdilemmaspresentedbyhighbunkerfuelprices,emissionregulationsandrequirementssuchasthenewballastwaterconvention.

TodaySafeBulkerscontrols21drycargoshipsinavarietyofclasses:panamax,kamsarmax,post-panamaxandcapesize,withacombineddeadweighttonnageofnearlytwomilliontonnes.Eightmoreshipswillbedeliveredby2014.SafeBulkersisapubliccompany,listedontheNewYorkStockExchange.

Lloyd’sRegisterspoketoSafeBulker’sCEO,PolysHajioannouintheAthensseasidesuburbofVoula,wherethecompanyoccupiesamodernoffice.Weaskedhimaboutthechallengeshiscompanyfaces–particularlyhighenergypricesandstrictenvironmentalregulations.

“Shippingisaneverevolvinganddynamicindustrywhichovertheyearshasfacedplentifulregulatorychangesforsafetyandenvironmentalpurposeswhichultimatelyaffectthenormalcourseofbusiness,”Hajioannoucommented.“Beingfocusedonrepeatedlyorderingnewbuildshipsofthelatestdesignsandtechnologiesallowsustofeelcomfortableinfacingthenewchallengesofthemarketandtoadjusttothemsmoothly.“

high specification tonnage Indeed,thecompanyhasaverymodernfleet.Itsfleetaveragessomefouryearsofageandoneofthespecialcharacteristicsisthatthecompanyhasnotboughtanysecondhandshipssince1986.ItsapproachistoacquirefromleadingJapaneseshipyardsthelatestdesignsavailableandbuildthemtoitsownspecifications.

SafeBulkershasbeenkeenonbuildingvesselswithbiggerandmoreefficientmainengines,abletooperateatlowerRPM,providingbetterfueleconomyandmore

flexibilitytothecharterersespeciallyatpresentmarketconditions.Givencurrentfueloilprices,thatdecisionislookingsmart–savingwelloverUS$2,000perday.NordoesHajioannouseefuelcostscomingdown.“Thiswillnotstop[risingbunkercosts].WewouldnolongerbesurprisedtoseeHFO(heavyfueloil)approachingUS$1,000pertonneatacertainpointinthenextthreetofiveyears,thoughwearehopingtobeprovedwrong.”

Thecompany’shighspecificationtonnagehasensuredthatthereisareadysecond-handmarketforitsships,whenitisreadytosellthemon,andthisallowsittokeepreinvestinginmoderntonnage.Thishelpedthecompanytosell11secondhandbulkersintheboomingtimesof2007–2008.

SafeBulkershasincorporatedothertechnicalandoperatingpracticestomaximiseefficiency:policiessuchasregularpropellercleaningand,whenwaitingforlongperiodsatanchorages,arrangingwithcharterersforashortsteaminglegeverytwoweekstopreventtheaccumulationofmarinegrowthontheunderwaterhull.“Wecleanourpropsandseachestseverysixtoninemonthsandwiththepaintsthatweareusing,andbypreventinggrowthatanchorage,wecanavoidcleaningvessels’hullsinEuropeanandAustralianwaterswhereenvironmentalrestrictionsapply.“

Hajioannouseesthedemandforeco-efficiencyintensifying,withmarketsreducingtheearningpowerofolder,higherconsumptionships.“Chartererswillstarttoleaseefficientshipsmoreoftenandheavyconsumptionshipswillstruggletofindreasonableemployment.“

Thecompanyapproachofacquiring,‘thebestshipswiththelatesttechnology’,seemstobestandingSafeBulkersingoodstead.WesaygoodnightandthankHajioannouforhistime.NighthasfalleninVoulabutthelightsinthecompany’sbuildingstillburnbrightly.Outatsea,inallthetimezonesoftheworld,SafeBulkersshipsaretradingwhile,inJapan,dawnwillsoonbreakovertheshipyardsconstructingthemostmodernships–soontojoinaverymodernfleet.

Safe Bulkers approachSafeBulkershaslookedtoleadthewayinfleetdevelopmentbybuying,between2001to2007,highspecificationshipsinaseriesofsisters.Tsuneishishipyardbuiltatotalof15vesselsbothpanamax(EUROTESS’76–TsuneishiEconomicalStandardShip)andkamsarmaxwhichweredesignedonthebasisofLloyd’sRegisterastheclassificationsocietyandequippedwithbiggermainengineanddieselgenerators,ballastcontrolconsoleandextramooringarrangement.Thesamephilosophyhasbeenfollowedforthefive87,000dwtpost-panamaxesSafeBulkershasbuilt,between2006and2009,inthehighlyrespectedIHIyardinJapan.

InrecentyearsSafeBulkershasadoptedstrongcommercialrelationswithanotherrenownedJapaneseyard,Imabari,aworldleaderintermsofdesign,qualityandefficiency.OutofsevenvesselsorderedatImabari,SafeBulkersalreadyhasthreeinitsfleetofthe95,000dwt‘Nexter’typepost-panamaxvessels.Theseareconsiderablyshallowerat14.45metresscantlingdraftandatleastfivetonnesmoreeconomicintermsoffueloilconsumptionincomparisonwithotherpost-panamaxesbuiltinChina.

Furtherordersincludetwo76,000dwtpanamaxbulkcarrierswithelectronicmainenginesandadvancedfuel-savingdevicesexpectingtobringdownthefueloilconsumptionbelow25tonnesperdayat13.5knotsladenspeed.Followingtheowner’sstrongrecommendation,Imabarirecentlydevelopedanewshallowdrafted80,000dwtvesselwith35-metrebeam,anin-betweendesignofthemodern32-metrebeampanamaxandthe38-metrebeampost-panamax,offeringflexibilityoncethenewPanamaCanalopens.


Greekshipscarryinggrain,ore,crudeoilanditsproductsplayalargeroleinkeepingtheenginesoftheworldeconomyturning.

WhilethedomesticproblemsandfutureoftheGreekeconomyhavebeensubjectedtointensescrutinyandspeculation,Greece’sshippingcompaniesremainakeycornerstoneofthemostglobalofindustries.Greekshipownerscontrol19%oftheworldfleetofbulkcarriersandoiltankers.

Timesaretoughinshippingrightnow.Althoughtheindustryisstillagrowingsectorandasimportantasever,thereisanover-supplyoftonnagefollowingexuberantorderingandadecadeofhugeincreasesinshipyardcapacity–mainlyinChina.Nowtherisingcostofbunkers(ship’sfueloil)combinedwithairemissionsregulationisposingsometoughquestions:‘DoIneedto,canI,orshouldIbuildnew,moreefficientships?’

And,soitwasinJune,withthesequestionsheavyintheair,thattheshippingworldcametoGreece–asitdoeseverytwoyears.ThisbiannualpilgrimageistoattendPosidonia,ahugefestivalofshippingheldintheGreekcapital,namedfortheGreekgodoftheoceans.RelationshipsarevitalinshippingandthemanyreceptionsforwhichPosidoniaisrenownedenableshippingfriendshipstobecementedandstrengthened,networksbuiltandmaintained,anddealsstruckbetweentheowners,shipmanagers,shipbrokers,shipbuilders,insurancechiefs,classificationheads,bankersandmanyothermarinestakeholders.

WhilePosidoniahasasubstantialsocialsideitisverymuchmore.ThePosidoniaexhibition,housedthisyearinanexcellentnewvenue,isashowcaseforshippingservicecompaniesandshipyards.Thisyeartherewerealsoaseriesofsuccessfulbriefings,forumsandconferencesthatexaminedtheshippingissuesofourtimes.

Withfuelefficiencyapriority,theshipyardswereinGreecetotryandsellnew‘eco’designstogetherwithnewpaints,newenginesandotherequipmentthatareonofferandthattheyhopetheycanselltosupportthenewgenerationofefficientshipsthattheyardsaremarketing.

Andthemainquestionsintheforumsandconferenceswerewhetherexistingshipswouldbemadeobsoletebynewshipsandtowhatextentanticipationisjustifiedthatnewshipswillincreasinglyoutperformexistingtonnage.

Therearetwoperspectiveshere.

Itisnaturaltoexpectthosewithlargeexistingfleetstodefendvaluesofshipsboughtathighlevelscomparedtotoday’snewbuildingprices.Theyhavetheirintereststoprotectandthiscanonlybeexpectedandthemajorityofownerswouldratherthattheexistingstateofover-supplyisnotexacerbatedbyneworders.

Ontheotherhand,charterers,thecompaniesthatemploytheships,wouldliketoreducetheirfuelbillsandsoareextremelyinterestedinmoreefficientdesigns.Theywouldhappilyseemorechoiceandthebalancebetweensupplyanddemandtiltedintheirfavour.

Howeveratpresenttherearefewnew,demonstrablymoreefficientshipsavailableforcharter.Althoughthislookssettochange,itmaysometimebeforetheshipperformancestatusquoisheavilychallenged.Inthemeantimetheindustrywillbeexaminingwithgreatinterestopportunitiestoimprovetheperformanceofexistingtonnage.

Nick Brown asks whether the time is right to build the next generation of ships.

Shipping focused on more efficient fleets

nick Brown isLloyd’sRegister’[email protected] me@nickbrown_LR


Temperatures plummeted. Snowflakes became snow blizzards. As 2011 drew to a close, many European countries experienced the bleakest December for a century. While consumers shivered and turned up the heating, utilities shook their heads and turned to the problem of renewable energy: how do you store it until people need it? “Weallknowtheweatherisunpredictableandhasasignificantimpactonthecostforwindandsolarenergyinstallations,”saysSeanCuthbert,Lloyd’sRegisterODS’sEnergySustainabilityAdviser.

“Itishardtosaywhenthewindwillbloworthesunwillshine.Couplethisbasicfactwiththecomplextaskofstoringenergyandyoucanbegintofeeltheindustry’sheadache.”

Itisafrustratingproblemconsideringmanyofourdailyneedsaremetbyacommonplaceobject:abattery.Yettodate,attemptstoevolveconventionalbatteriestoservegrid-sizedapplicationshaveprovedunsuccessful.Thereasonispartlybecausebatteriesarenotgoodatdispatchingelectricityathighvoltages,andhigh-voltagetransmissionisthemostefficientwaytotransportelectricityoverdistances.Itisalsoaboutscalabilityandsizeofthepoweroutputandthetotalenergystored.Withtherightconditions,thebiggestoffshorewindfarmscanproduce400MWofpower,butthelargestsetsofconventionalchemicalbatteriescanonlystore

Bottling nature’s forcesHow can we best store renewable energy?

Sean Cuthbert, Lloyd's Register ODS’s Energy Sustainability Adviser, talks to Jason Knights about the challenge for green energy.


afewmegajoulesatatime.AstheFinancial Timesputit:wewasteahugeamountoftherenewableenergywedoproduceandwehavetokeepexpensivefossilfuelstationsonstandbyforwhentheweatherfailstodeliver.

Safe, reliable, affordable storage Americanenergyanalyst,LuxResearch,estimatesthatglobaldemandforgridstoragewillincreasefromUS$50billiontodaytoUS$113billionin2017.

Sowhataretheapproaches?“Thefirstislongtermtotakeadvantageofdaily,weeklyandseasonalvariationsinrenewableenergy,”saysCuthbert.“Short-termstorageisequallyimportant.Frommillisecondstominutes,utilityprovidersneedtohandlerapidenergysurgesanddropsofelectricitysupplyacrossagridwhilematchingdemand.Ifdemandoutstripssupply,electricityisdispersedtoowidely.Thefrequencyfalls.Lightsdim.Ifsupplyoutstripsdemand,thefrequencyrisesandelectricaldevicescanbedamaged.”

Long-term thinking Onemethodappearstobewayinfront.Pumped-storagehydroelectricity(PSH)accountsforahighpercentageoftheworld’selectricitystorageneeds.Itworksbyusingelectricitytopumpwatertoahigherpointwhenthereislow-energydemand.Whendemandincreases,waterisreleased,poweringgeneratorsasitgushesdownwards.

Thetechnologyisestimatedat70%to80%energyefficient,withthecapabilitytostorepowerforlongperiodsanddispatchhigh-voltagepoweratamoment’snotice.Thecatchisgeography.SettingupaPSHschemerequireshillsandlakesandtheyareinlimitedsupply.“Thedownsideisthatenergyisnotstoredindefinitely,”saysCuthbert,“andinplacessuchasEgypt,theUS’ssouthwestandChina,evaporationlossesareverysignificantwhichlowerstheoverallenergyefficiencytoaround50%.”

Sonewtechnologiesandmethodsarebeingdevelopedandtested.Oneapproachhastwoshafts–onelargerthantheother–shiftingwaterbetweenthetwo.Surpluselectricitypumpswaterdownthesmallershafttoraiseaweightinthelargershaft.Whenelectricityisneeded,theweightsinks,forcingwaterturbinestogeneratepower.AnotherapproachistheuseofminepitsforundergroundPSHfacilities.

Harnessinggasinplaceofwaterisalsobeingexplored,withexcesselectricitybeingusedtocoolandcompressairwhichisstoredunderground.Whenpowerisneeded,compressedairisreleasedtoturnturbines.Newtechnologiesarebeinglookedatthatalsocaptureheatusedintheprocesstoboosttheenergyefficiencyofthesystem.

“Forlargegrid-scalepowerprojects,engineersaretestinghowsurpluselectricitycanbeusedtoproducehydrogenfromwater,andwherehydrogencanbestoredincavernsorgaspipelinenetworksandusedtofuelpowerstationswhenelectricityisrequired,”saysCuthbert.

Short-term answers Todate,gridoperatorshavereliedonfossil-fuelplanttobalanceshort-termenergydemandwithsupply.Incorporatinggreateramountsofrenewableenergyintothemixmakesthebalancingactmoredifficult.Thequestionis,whatcansmoothoutthepeaksandtroughsinsupply?

Theflywheelanditsphysicsaresimple.Flywheelsaresuspendedinavacuumbyelectromagneticforces,wheretheycanspinattwicethespeedofsound.Grid-scaleflywheelscanabsorbordispatchmegawattsofenergyatanytime.Thenthereare‘Powercubes’(lead-acidbatteries)thathaveaddedsuper-capacitors.Theseefficienthybridsarebundledintoshippingcontainersforgridoperatorstouse.

Utilitysuppliersarealsoturningtheircustomers’buildingsintoelectricitystorageunits.Freezerunitsorventilationsystemscanactasatypeofstorageand,bygrabbingextraenergy,participantsintheschemewillneedlesslater,meaningfuturedemandcanbereleasedforotherusers.IntheUS,morethan30,000MWofelectricityiscontrolledthisway,with‘demand-response’customersreceivingadiscountedbill.

Oneofthemostpromisingmodelsisacentralisedlarge-scale(utility-scale)electrochemicalenergystoragesolutionthatisnotdependentongeographyandcanalsobescaledseparatelyintermsofpowerdeliveredandenergystored.Suchtechnologyexists:theflowbattery,currentlythesubjectofresearchincludingastudysponsoredbyLloyd'sRegister.

A European supergrid “Short-termstorageisessentiallygridmanagement,sowecanexpectupgradedlinksandsmartersystems,”saysCuthbert.“Look,forinstance,attheinterconnectorsbeingbuilttoserveaEurope-widesupergrid.France,BritainandtheNetherlandsarehookedupwithafurthernineEuropeanlinksplanned.Tomorrow’spowermaycomethankstothelatestturbinesbeingbuiltoffthewind-lashedScottishcoastandsolarpanelsinsouthernGermany,TurkeyandNorthAfrica,orthankstowavetechnologyofftherollingEuropeancoastlinesandhydropowerfromdamsinNorway’sfjordsandtheSwissAlps.”

Progressis,itseems,beingmadetobottlenature’s‘free’power.

Jason KnightsisGlobalCommunicationsManagerforLloyd’sRegister’[email protected] me@jasonknights_LR


ThE RETURn oF ThE BLACK RoCKIt powered the Industrial Revolution. Will it fuel the future?

The world needs a steady supply of base-load energy. Yet again, coal appears to be providing the only real answer, especially for the emerging economies, reports Jason Knights.


E mittingtwiceasmuchcarbondioxideasnaturalgas,coalseemsanoddchoiceasa‘fuelofthefuture’.Theblacksedimentary

rockconjuresupimagesfromthepast–ofsteamships,locomotivesandfactoryfurnaces.Indeed,formuchofthe20thcentury,coalappearedtobeonitswayout.Bythemid1960s,oilhadovertakencoalastheworld’smostusedenergysource.Addgrowingfearsoverclimatechangesincetheendofthelastcenturyandthe‘blackrock’offossilfuelsseemedboundfortheannalsofenergyhistory.

Butwhileanumberofoldcoal-firedplantareheadingfordecommissioningorbusyreinventingthemselves,thisisfarfromthecompletepicture.Takingtheworldasawhole,coalhasnotbecomelesspopularinrecentyears:itsuseisontherise.AccordingtotheBP Statistical Review of World Energy June 2012,coal’stotalshareoftheworld’senergyconsumptionisestimatedat30.3%,thehighestsince1969.Bycontrast,oil’sshareofglobalenergyusepeakedat48.5%in1973.Ithasnowslippedbackto33.1%.

Coal’smainstrengthsarethreefold.Itischeap.NootherfuelasidefromUSshalegascanbeatitspriceperunitofenergyproduced.Itisabundant,withpossiblyenoughcoalleftinthegroundtosupplycurrentenergydemandsforover120years.Moreover,coaliswelldispersed.Importersarelessworriedaboutsecurityofsupplyorhavingtodealwithcartelsthanwithotherfossilfuels.

Coal fired in Asia AsChina’seconomyhasgrown,energydemandhassoared.ChinahasovertakentheUSasthelargestglobalenergyconsumer.UnworriedbyEuropeanregulationsorstrongenvironmentalopposition,ithasoptedforthecheapest,mostreliablesourceofenergyitcanfind:coal.Italsooffersasecuresupply.Chinahasvastcoalreserves,asdoesneighbouringMongolia.

Inthelasteightyears,China’scoalusehasdoubled,anditisestimatedthathalfofthecoalburnedintheworldisnowburnedinChina.Thecountry’sminersworkhardtodeliverthreebilliontonnesofcoalayear,makingChinatheworld’slargestcoal

producer.Yetitsdemandforenergyissogreatthat,lastyear,itovertookJapantobecometheworld’sbiggestimporterofcoaltoo.Thecountrymightbeheadingforaneconomicslowdown,butinthelongerrunitsenergydemandwillcontinuetogrow,evenifitisataslowerratethanrecenttimes.

India’scoaluseisgrowingfasttoo,almostdoublingin12years.Italsohashugedomesticreserves–thefifthbiggestintheworld–andistheworld’sthird-largestproducer.Butwithonethirdofhouseholdsnothavingenoughelectricitytopoweralightbulb,Indiaisdesperateformoreelectricity.WehaveseenhowIndia’senergycrisisspreadtomorethanhalfthecountryafteritseastern,northernandnorth-easternelectricitygridscollapsed,leavingmorethan600millionpeopleacross13stateswithoutpower.Energysupplyiscritical.WhileIndiaisexpectedtotriplethenumberofcoal-firedplantsoverthenextdecade,ithasalsocutcoalimporttariffs,openingupapotentiallyvaluablenewmarketforproducers.LookwiderafieldacrossAsiaandyouwillseeasimilarpictureofmorecoal-firedpowerplants.

not just the emerging markets Whilethenewgrowthincoaluseiscomingfromtheemergingmarkets,thedevelopedworldisprovingreluctanttogiveupthisfossilfuel.TheUS,forexample,reliesoncoalforapproximatelyathirdofitselectricitydemand.Andevenifutilitieswanttoswitchfromcoaltogasmuchdependsontheinfrastructureandcapabilityofthepowergrid.

Economicsmayalsocomeintoplaytoreducetherateofswitchover.Thecurrentlownaturalgaspricesarelikelytorisewhenliquefiednaturalgas(LNG)exportterminalsarebuilt.NewfacilitieswillallowUSLNGproducerstoselltoAsia–wheregasisfivetimesmoreexpensive.Inthisnewmarketlandscape,coalwillbecomeincreasinglycompetitiveasanalternativefuel.

AGermanenergystudyevenconcludedthatcoalplantwillenjoyanupswinginEurope.

Germany’sdecisiontoclosedownitsnuclearreactorsby2020willcreateanenergysupplyshortage.Thatgapcould

bemadeworsebylowersubsidiesforrenewableenergysources,combinedwithvolatilegasprices.Enter50GWofnewEuropeancoalplant,whichcouldpotentiallybebuiltbetweennowand2020.

Forasustainableenergyfuture,coal’senvironmentalimpactshouldbereduced–morethan70%ofCO2emissionsarisefromcoal-firedpowergeneration,accordingtotheInternationalEnergyAssociation.Usingcoalmoreefficiently,coupledwithcarboncaptureandstoragewillbeimportantsteps.

What of the alternatives? Lookingatotherenergysources,solarandwindpowerhavemadehugeadvancesinthelast10years,butcurrentlyprovidelessthan2%oftheworld’stotalenergysupply.Whilethesepowergenerationtechnologiesneedtobeapartoftheenergymixofthefuture,theirenergyisintermittentandclimate-dependent.Improvementsinelectricitystoragewouldhelp,butrenewableenergystillneedstobebackedbyplantthatcansatisfy‘on-demand’power.

Iscoalthesolutionhere?Oilisbecomingexpensivewithharder-to-reachanddeeperexploration.Naturalgashaspotentialandproductionwillnodoubtboom,butitisunlikelytosupplantcoal.Andtheshalegasrevolutionsparkedbyadvancedtechniquesindrilling,hasyettocatchoninEuropeandAsia.Asfornuclear,thefuelsource,uranium,isextremelycheapbutnuclearplantareexpensivetobuild(accountingforsome60%ofthetotalcostofpowerproduced,comparedtoabout14%foragasplant).Overalonglife,nuclearplantcanoftenprovecost-effective,buttheinvestmentupfrontisachallengetoheavilydebt-burdenedeconomiesintheWest.Soitcomesbacktosatisfyingbase-loadpowersupplywhichmeanscoalislikelytobewithusaspartoftheenergymixsolutionforsometime.

Jason KnightsisGlobalCommunicationsManagerforLloyd’sRegister’[email protected] me@jasonknights_LR


How has the industry responded in the wake of the Concordia incident?Overthepastseveraldecades,thecruiseindustryhascontinuallyreviewedbestpracticesanddevelopedinnovativetechnologiestofurtherstrengthenitssafetyrecord.

IntheimmediateaftermathofConcordia,CLIA,speakingonbehalfoftheglobalcruiseindustry,launchedtheongoingCruiseIndustryOperationalSafetyReview,whichwasannouncedpubliclyon27January2012.ThereviewisacomprehensiveassessmentofthecriticalhumanfactorsandoperationalaspectsofmaritimesafetyandbeganwithaninternalreviewbyCLIAmembersoftheirownoperationalsafetypracticesandproceduresconcerningissuesofnavigation,evacuation,emergencytraining,andrelatedpracticesandprocedures.

Thereviewisguidedbyathird-partypanelofexpertswhoseroleistoprovideanimpartialassessmentoftherecommendationsdevelopedbythereview.Eachpanelmemberbringsin-depth

experienceinthemaritime,regulatoryandaccidentinvestigationfields,withpanelmembersbalancedgeographicallywithequalrepresentationfromtheUSandEurope.

Todate,CLIAandtheEuropeanCruiseCouncilhaveannouncedsixnewpoliciesaspartofthereviewthathavebeenadoptedbytheirmembercruiselines.Allpoliciesexceedcurrentinternationalregulatoryrequirementsandpertaintoawiderangeofissues.ThesepolicieshavebeenorwillbesubmittedtotheInternationalMaritimeOrganization(IMO)forindustry-wideimplementationtofurtherimprovesafetyonboardcruiseships.

Wearetakingaholisticlookatsafety,asevidencedbythebreadthandscopeofthenumerouspoliciesthathavebeen

Keeping guests and crew healthy, safe and secure and protecting the environment are

fundamental to the cruise industry.

Cruise: forging ahead

Christine duffy, President and CEo of the Cruise Lines International Association (CLIA) answers some queries posed by Rebecca Moran.

In 2011 worldwide, a record 16.3 million

passengers went on a cruise


developedandadoptedaspartoftheReview.Detailsonallpoliciesareavailableonlineatwww.cruising.org.

What is the cruise industry doing to reduce its impact on the environment?Ourindustryhasavestedinterestinprotectingtheglobaloceanenvironment,notonlybecauseitistheresponsiblethingtodo–butalsobecausecleanoceansandbeachesareessentialtothecruiseexperience.

Wefollowenvironmentalstewardshippracticesthatseektofullyprotectthecommunities,ports,andwaterswhereverweoperate.Iamextremelyproudthatourindustryhasbeenattheforefrontofwastewatertreatment,emissionsreductionanddevelopinginnovativetechnologiestoreducetheenvironmentalimpactofcruising.

CLIAmemberscurrentlyemploywastewatermanagementpracticesandproceduresthataresubstantiallymoreprotectiveoftheenvironmentthanarerequiredbyregulation.Ourmembers

areinvestinghundredsofmillionsofdollarsintechnologiestofurtherreducetheimpactofcruiseshipsontheworld’soceansandecosystems.

Asmorefuel-efficientshipshavecomeintoservice,CLIAmembershavebeensystematicallyreducingairemissions.Theindustryhasinvestedsignificantlyoverthelastdecadetodevelopandimplementnewtechnologiesthathelptoreduceairemissions,includingutilisingexhaustgasscrubbers,developingenginesthatrunmoreefficientlyandusingshorepower.

I’dalsopointoutthatcruiselineshaveavarietyofenvironmentallyinnovativeprogrammesinplacethathelpshipsconserveenergy,fromswitchingtolowenergyLEDlights,usingrecycledhotwatertoheatpassengercabins,andusingspecialwindowtintingthatkeepspassagewayscooler,whichrequireslessairconditioning.

Are there any industry trends you’d like to highlight?Inthelastfiveyears,theglobalisationofcruisinghasbeenoneofthedominantthemesintheindustry,withparticularly

stronggrowthinEurope.Weareseeinggrowinginterestincruisingtoexoticregionsoftheworld.CLIAmemberlinesareprovidingmorechoiceinitineraries,price,andlengthofcruise.There’sanevengreaterchoiceinshipboardactivitiesandamenities,notablynewdiningexperiences.Iwouldalsonotethatweareseeingincreasingpopularityofshortercruisesacrossallpricecategories.Otherstrongareasofgrowthforourindustryareintheluxurycruisemarketandtherivercruisemarket.

Final words?Ithinkit’simportantforpeopletoknowthatcruisingisoneofthesafest,affordableandenjoyablevacationexperiencesavailabletoday.Infact,cruiseshaveahigherpercentageofsatisfiedcustomersthananyothervacationexperience.

Rebecca MoranisLloyd’sRegisterAmericas’[email protected]

About CLIAThenonprofitCruiseLinesInternationalAssociation(CLIA)isthelargestglobalcruiseindustryorganisation.CLIArepresentstheinterestsof26memberlines,15,000travelagents,and120executivepartnersbeforeregulatoryandlegislativepolicymakers,supportingmeasuresthatfosterasafe,secureandhealthycruiseshipenvironment.

www.cruising.org


Stewards of the seasThe World ocean Council has a vision: ahealthyandproductiveglobaloceananditssustainableuse,developmentandstewardshipbyaresponsibleoceanbusinesscommunity.


Paul holthus, the Council’s Executive director talked to nick Brown about bringing together the ocean business community to collaborate on stewardship of the seas.

PaulHolthus,ExecutiveDirectoroftheWorldOceanCouncil(WOC),regularlycirclestheglobetobeincontactwithleadingoceanindustrycompanies.Awiderangeofindustrieshaveaninterestinoceanresources:shipping,oilandgas,fisheries,aquaculture,tourism,renewableenergy(wind,wave,tidal),ports,dredging,cablesandpipelines,carboncaptureandstorage,aswellasthemaritimelegal,financialandinsurancecommunities.

Holthusisfocusedondevelopingcollaborationacrosssectorsbybringingtogethertheoceanbusinesssustainabilityleaderswhoaredrivingchange.Heisseekingtounderstandandharnessthepowerofcorporatedecision-makerstotackletheenvironmentalissuesthatarechallengingcontinuedaccesstooceanspaceandresourcesbyresponsiblebusiness.

“Leadershipcompaniesaremakinggoodprogressbutweneedabroadrangeofoceanindustries,wellbeyondmerchantshipping,workingtogetherifthediverseoceanbusinesscommunityisgoingtosecurethefutureforoceanhealth,productivityandsustainableuse.”Butwhilesomuchofthefocusinshippinghasbeenonemissionsfrommerchantships:“WOCistryingtolookatthewholepictureacrosstheoceanuserspectrumandthebroadrangeofoceanissues,frominternationalpolicytopractical,operationalissues.”

The WoC rationaleAlthoughtheoceancovers71%oftheearth’ssurface,itisanincreasinglycrowdedplace.Oceanindustriesofallkindsareexpandingrapidlyandimpactsonthemarineenvironmentaregrowingataneverincreasingrateandglobalscale–affectingendangeredspecies,ecosystemhealth,criticalhabitatsandcoastalcommunitiesthatdependonmarineareasforfoodandlivelihood.Conflictsintheuseofoceanspaceandresourcesareontheriseamongindustries,andwithotheroceanstakeholders.

Oceanindustriesarebeingheldaccountablefortheirimpactsbygovernment,inter-governmentalandnon-governmentalstakeholderswhoarepursuingincreasedmarineenvironmentalregulation.Privatesectoraccesstooceanresources,servicesandspaceisincreasinglyatriskduetothelossofthe‘license’tooperateandtheemergingoceangovernanceregimes.Unfortunately,therehasbeenlittleornointeractionamonglike-mindedresponsiblecompaniesacrossthesectorstodevelopleadershipandcollaborationonoceansustainabilityandengageinsystematic,co-ordinatedinvolvementwithotheroceanstakeholders.

Theprivatesectoristheprimaryoceanuserandisbestplacedtodevelopandimplementthepracticesneededtoensuremarineecosystemuseissustainable.Anincreasingnumberofcompaniesandindustryassociationsaretacklingtheenvironmentaleffectsoftheiroceanactivities.However,inaglobal,interconnectedocean‘commons’,theactionsofonecompanyorevenanentiresectorarenotenoughtoaddresscumulativeimpactsofgrowingoceanusebyadiverserangeofindustries.Thereisclearlyaneedforoceanindustriestocollaboratewithinandacrosssectorstoaddressimpacts,reduceconflicts,developproactiveoceansustainabilityleadershipandconstructivelyengageotherstakeholders.

SoS 2013TheWOCwillholditssecondSustainableOceanSummitin2013andhopestobuildonthesuccessoftheevent,firstheldinBelfastin2010.Thisistheonlyinternational,‘cross-sectoral’oceansustainabilityconferencedesignedforandbytheprivatesector.

HolthusispositiveabouttheInternationalMaritimeOrganization’s(IMO)role.“TheIMOisaleaderinhowUNagenciesneedtotakeonglobalchallengesanddevelopsolutionsinpartnershipwithindustry,”saysHolthus.“IMOisshowingthewayintacklingtheinternationaloceanchallengesataglobalscaleanddevelopingenforceableregulations.”

AndtheWOCwasinvitedbytheUNtohelpdevelopanOceansCompactforconsiderationbytheworld’sgovernmentsattheRio+20summitonsustainabledevelopment.“TheworkoftheprogressivecompaniesintheshippingindustryandIMOprovidedimportantinputtothis,”saysHolthus.InAugust,theUNSecretary-General,BanKi-moon,launchedtheOceansCompactwhichaimstobringtogetherallpartsoftheUNsystemtoimprovetheco-ordinationandeffectivenessoftheworkoftheUNonoceans.

ForHolthus,highseasgovernanceandbiodiversityimpactsaresomeofthenextbigthingsthatoceanindustriesneedtoknowareonthehorizon.Itisparticularlyvitalthattheshippingindustryunderstandstheimportantimplicationsofthesedevelopmentstomaritimetransport,andthatshippingcannotsolvetheseissuesonitsown.“Shippingneedstoengagewiththeotheroceanuserstotackletheseocean-scalesustainabilitychallengesinwaysthatworkforthebusinesscommunity.TheWOCistherecreatingtheeyes,earsandvoiceforshippingandotherindustriesinthesecross-cuttingoceandiscussions.”

nick BrownisLloyd’sRegister’sMarineCommunicationsManager.E [email protected] me@nickbrown_LR


Value generatorFrom his corner office in a tower block overlooking Utrecht Central Station, Professor Leo van Dongen

can oversee all the comings and goings at one of the Netherlands’ busiest stations.


Professor Leo van dongen talks to Andrew Foulkes about the importance of professional asset maintenance in the rail industry

Itisavistathatwouldbecherishedbyanyrailenthusiast,butVanDongenhasmorereasonthanmosttovaluethisparticularvantagepoint:itishisjobtoensurethatcommutershereinUtrecht,andelsewhereacrossthecountry,willbegettinghomethatevening.

AsDirectorofFleetServicesforNedTrain,VanDongenis,ineffect,thenation’strainengineer-in-chief,responsibleforthemaintenanceofthe2,900carriagesthatservethenationalnetwork.Dayin,dayout,ithisteam’sresponsibilitytomanagethefleet’srepairandrefurbishmentprogrammeswithoutanyimpactontheclockworknatureoftheDutchrailtimetable.

It’sacomplexlogisticalexercisewithlittlemarginforerror.And,withalmost30yearsinthebusiness,itisnotsurprisingthatVanDongenhasstrongviewsabouttheroleofthemaintenanceprofessionwithinasuccessfulrailbusinessandisembarkingonaprojecttoraiseitsacademicstandingandpassonthecoreskillstosimilarindustriesthataresodependentupontheircapitalassets.

dutch mastersTheDutchexpectagreatdealfromtheirrailway,whichisunderstandablegiventhecountry’sphysicalandeconomicgeographycouldnotbemoresuitable.

Withnotrulylargecities,butaround50majorurbancentres,thecountry’snetworkoperatesonsomethingmoreakintoalarge-scalemetrosystem,withthemaintownsconnectedbyastricttimetablethatseesintercityservicesrunningat15-minuteintervals.Nomoresothanintheregionknownasthe‘Randstad’,thedenselypopulatedareaformedbythecountry’sfourlargestcities–Amsterdam,Rotterdam,UtrechtandTheHague–wherealmosthalfofthecountry’s17millioninhabitantslive.

TheDutchrailnetworkhasalwaysbeenmuchadmired–askanyvisitortoSchipolAirportabouttheeaseatwhichtheycanconnecttoanymainbusinesscentre–andisregardedasoneofthemostefficientinEurope.Butattheturnofthemillenniumperformancewashardlyfivestar.Almostoneinsixcarswerestuckinthemaintenancequeueandengineerswerestrugglingtoobtainthenecessaryparts,allofwhichcontributedtoashortageofavailablerollingstock.Punctualitywasdownto79%.

Itwasaperiod,saysVanDongen,duringwhichonecouldalsosenseanindustrythathadstartedtoloseitstechnicalknowledge.“Historically,likemanytrainoperators,whenprocuringnewvehicleswewouldliterallyspecifyourowntrains.Thismeantthe

designandbuildofourfleetwouldbeinformedbyourownexperiencesandourowntechnicaldemands.Inturnwecontinuallybuiltupourowninternaltechnicalcompetencies.”

However,changesinthemarketmeantthatvehiclesbecamelessbespokeandmore‘offtheshelf’,withthemanufacturersthemselvessettingthetechnicalcapabilitiesfortheirvariousmodels.Asaconsequence,saysVanDongen:”we[therailwayindustry]forgottheknowledgeweneededtomanageourownmaintenanceprocesses”.ThiswasasymptomofthechangethatsweptthroughEuropeannetworksduringthe1990swhenitbecamearequirementofEUmemberstatesthattheorganisationsoperatingtheinfrastructure(track,signallingetc)wereseparatedfromthosewhorancommercialservices.

NederlandseSpoorwegen(NS),theDutchrailways,beganthenecessaryrestructuringin1994and,today,itsinfrastructureismaintainedbyProRail,whileNSoperatesthevastmajorityofnationalservices(withafewregionallinesrunbyprivateinterests).NedTrainisafullsubsidiaryoftheNSgroup,maintainingthevehiclesthatenableNStooperatethe4,800servicesthateachdaycarryoveramillionpassengersacrossoneoftheworld’shighestdensityrailnetworks.WhiletheNSfleetisitsmainresponsibility,NedTrainisfreetocompetefornon-NSbusiness.

However,itwasduringthisperiodwhentheengineeringtradewithintherailindustryfounditselftakingabackgroundroleasprivatisation,shareholdervalueandoutsourcingbecametheboardroombuzzwords.

“Atthattime,managers,engineersandoperatorswerenotco-operatinginthedevelopmentoftheinnovationchainofproduct,processandtechnology.Therewasnoopeninteractionbetweenthesedisciplines.”

Back in chargeYet,today,punctualityisbackto95%.Sowhatchanged?

“We’vegotcontrolagain,”saysVanDongen,“technologyisbackontheagendaandmaintenanceprocessesarenolongerseenasacostbut,instead,somethingtobeinvestedinandintegratedwithinbusinessstrategy.”

Somehigh-level,basicfactsunderlinehispoint.Asaroughguide,procuring100carriagesaspartoftheannualrenewalprogrammewouldcostanoperatorapproximately€200million.Butthecostofmaintenanceovertheir30-yearlifespan,atcurrentprices,willbemorethandoublethat–broadly€300millionforgeneralongoingyear-roundmaintenanceand€100millionforafullrefurbishmentaroundthehalfwaypointofitslifecycle.

“Inanysector,overthecourseofanasset’slifetime,abusinesscanfinditselfspendingseveraltimesitsinitialinvestmentoncyclicalmaintenance,modernisationandlifeextension.”Yettooofteninindustrythelifetimemaintenancecostsareleftasanafterthought.

”We have a better balance now between

business execution and maintenance concepts”


Furthermore,giventhatfleetmanagersmustalsoliveinaprofitandlossworld,theyareacutelyawarethatcarefulinvestmentandmanagementoftheresourcesattheirdisposalcanalsodeliverquantifiablebenefits.Forexample,whenin-servicetrainsreportafaulttheissuewilltypicallybesomethingroutine,afaultypantographorasetofmalfunctioningdoors.Repairingsuchfaultsintheworkshopmayrequirejustanhour,butitcantakeadayeithersidetomovethevehicletoandfromthedepot,meaningthetrainiswithdrawnfromserviceformorethan48hours.

WhichexplainsNedTrain’sdecisiontoinvestinnewTechnicalCentres(smallworkshops)inspecificlocationsacrossthenetwork.Thequickerturnaroundofvehiclesworksoutequivalenttohavinganextra25to30carriagesinserviceatanygiventime–extrastockthatwouldotherwisecostaround€50milliontobuy.

Furthermore,thediagnosticequipmentcarriedonboardtoday’smodernfleetsallowmaintenanceteams,throughremoteconditionmonitoring,toanticipatefaultsbeforetheyevenoccurandtoorganiseresourcesaccordingly.Arollingstockengineer–whothesedaysisaslikelytoworkwithalaptopratherthanatoolbox–couldhavealreadydiagnosedtheproblemandbefullypreparedwithnecessaryequipmentbeforethetrainisevensummonedtotheworkshop.

ToVanDongen,ratherthanbeingseenasanecessaryevilcomprisedofteamsworkingthroughthenightwith‘open-endedspannersandgreasyhands’,maintenanceshouldberespected

asadisciplinethatsitsattheinterfacebetweenassetownersandsuppliers,ensuringthatmaintenanceplanningisfullyintegratedinoperationaldecisions,fromtheinitialbusinesscasethroughtoprocurement,delivery,serviceandeventualdecommissioning.

“Itisnotjustaboutrepairs,itisaprofessionthatinvolvestechnical,administrativeandmanagementresponsibilities,”hesays.“Itisnot

acost,butmoreofavaluegenerator.”

ThatisthechangeinculturethattookplaceinNedTrain:“Wehaveabetterbalancenowbetweenbusinessexecutionandmaintenanceconcepts”.

Supporting the next generationInadditiontohisdutiesatNedTrain,VanDongenisalsoworkingwithatriumvirateofDutchuniversitiestopromotetheacademicstandingoftheprofessionandencouragefurtherresearchintomaintenance

processes.ThisSeptemberseesthelaunchofnewpost-graduatequalificationsinmaintenancemanagementwiththefirst16participantsstartingunderhistutelageattheUniversityofTwente.

TheresearchisfundedbyTheLloyd’sRegisterEducationalTrust(TheLRET),withVanDongenheadingoneofTheLRET’s27researchcentresofexcellencearoundtheworld.EachplaysavitalroleinfulfillingTheLRET’saimtosupporteducation,trainingandresearchprogrammesintransportation,science,engineering,technologyandthesafetyoflife,worldwide,forthebenefitofall.

Itissomethingaboutwhichheisclearlyproud.“Therewillbeincreasingdemandacrossallsectorsforyoungengineerswhoareabletomaketheirpresenceknown.Itisourresponsibilitytomakesurethatthenextgenerationarereadyandabletomakefurtherprogressintermsofunitingtechnology,knowledgeandoperationalmanagement.”

no compromise on safetyBackinhisofficeitislateFridayafternoonandUtrechtCentralStationisgearingupforoneofthebusiesttimesoftheweek.LeovanDongenhasseenenoughFridaygetawayspassquietlybytoexpectanythingdifferenttoday.Sowhatkeepsanexperiencedfleetmanagerlikehimselfupatnight?

“Safety,”herespondswithoutanyhesitation.“It’smyrole.It’sthemostimportantthing,moreimportantthanreliability.Nocompromises.”

Inanindustrythathasundergonesomuchrestructuringandfindsitselfunderincreasingpressuretoincreasecapacitywhilecuttingcosts,itisreassuringtoknowthattheindustry’sengineershaverediscoveredtheirvoice.


“Maintenance should be respected as a discipline that sits at the interface between asset owners

and suppliers.”


Exploring the value of independent third-party certification

As businesses around the world seek to improve competitiveness, lower risk and build resilience, Insight talks to two leading

authorities in the field of independent certification.

Mike JamesisManagingDirectorofLloyd’sRegisterQualityAssuranceLtd(LRQA)andMichael ToffelisAssociateProfessorofBusinessAdministrationatHarvardBusinessSchool.Toffel’sresearchseekstoidentifywhichvoluntaryprogrammesandmanagementsystemstandardsactuallydistinguishparticipatingcompaniesashavingsuperiorperformance.

CEOs and managing directors worldwide are increasingly recognising the link between certified management systems and the success and survival of organisations. This senior engagement is not only unlocking the intrinsic value of certified management systems but is delivering a clear return on investment to organisations worldwide. drivers for certification Inthecourseofhisresearch,ProfessorToffelhasfoundthatthemaindriverforindependentcertificationofqualitymanagementstandardssuchasISO9001(QMS)ismeetingtherequirementsofcurrentandpotentialcustomers.However,hesays:“Incomparisonwiththequalitydomain,companiesmorerarelyrequiretheirsupplierstoadoptinternationalstandardsgoverningenvironmentalmanagementandlabourconditions,whichisonereasonfewercompanieshaveadoptedthem.Thismeansthatsuchstandardsoffergreateropportunityforsupplierstodifferentiatethemselvesfromtheircompetitors.”


theirapproachacrosstheirvariousplants,whichsomemanagershavenotedisparticularlyhelpfulafteracquisitions.So,ISO14001canprovideaconsistent,structuredapproachtothemanagementofenvironmentalaffairs.”

Afurtherbenefitofindependentcertificationiscompliancewithcustomer-specifiedrequirements:“Manycompaniesnowrequireindependentlyapprovedcertificationtoanumberofdifferentstandardsinordertolowerriskandassuretheresilienceoftheirsupplychains,”saysJames.Thepremiseisthatbecomingcertifiedtomanagementsystemsstandardsyieldssuperiorperformancethroughprocesscontrolorproductquality.Inaddition,somebelievethatadoptingthesestandardscanleadtofewerproblemssuchasprocessdisruptionsorproductdefects.

Ifthesestandardscauseorganisationstocreatestructuredprocessesforemployeestoofferimprovementsuggestionstomanagement,thentheadoptionofthesestandardscouldleadtoimprovementsinemployeeengagement.

Whileallcertificationdeliversanumberofcommonbenefits,eachindividualstandardprovidesitsownspecificadvantages.Forexample,Toffelsays:“Intermsofprocesses,afewacademicstudieshaveshownthatEMSadoptersexperiencedfasterreductionsinpollutionandgreaterimprovementsincompliancewithenvironmentalregulations,comparedtoasimilarsetofnon-adopters.”

Inadifferentstudy,co-authoredbyUniversityofCalifornia,Berkeley’sProfessorDavidLevine,ToffellookedatISO9001againcomparingadopterswithnon-adoptersoveraperiodoftime.TheresearcherslookedatsingleplantfirmsinCaliforniaandfoundthattheQMSadoptersrealisedfastersalesgrowthandemploymentgrowthcomparedtoasimilarsetofnon-adopters,whichservedasthecontrolgroup.TheyalsofoundsomeevidencethatQMS

Continuousimprovementisakeyfeatureofinternationallyrecognisedbusinessstandards.Organisationsarerequiredtosetobjectivesandtargetsandtomeasureandreviewprogressagainstthesetargets.Butitdoesnotstopthere.AsToffelsays:“Thewholeideaisthatasyouachievethesetargets,yousetnewones.Forexample,theenvironmentalmanagementstandardISO14001(EMS)containsalotofprovisionstohelporganisationsensurethatproceduresaredocumentedandthatstaffarewelltrained.Butifthatwereallithad,thenyouwouldn’tnecessarilyexpectimprovement;targetsthatrequireperiodicreviewandrevisionensureadriveforcontinuousimprovement.”

What are the benefits of certification? MikeJamesbelievesthatindependentassessmentandcertificationtointernationallyrecognisedstandardsinspiresstakeholderconfidenceanddrivesorganisationalresilience,competitiveadvantageandgrowth.

TakingISO14001asanexample,thisstandardhelpscompaniestoorganiseenvironmentalmanagementprocesseswithinaplantoracrossanorganisation.Itrequiresthecreationofanenvironmentalpolicyanddocumentationofproceduressuchastrainingandinternalqualityaudits.

”ManyofLRQA’sclientshavedemonstratedthatanEMSimprovesanorganisation’sregulatorycomplianceinareassuchasenvironmentalemissions,energyefficiencyandwastemanagementandassuchcanofferopportunitiesforcostreduction,”saysJames.“Thecreationofaneffectiveenvironmentalmanagementplanreducesrisk,providingassurancetostakeholdersandoftendeliveringbrandbenefits.”

Summarising,Toffelsays:“It’sawayoforganisingalloftheorganisation’sactivitieswhichmightotherwisebeconductedinamoreadhocmanner.Itcanalsohelporganisationsharmonise

“The creation of an effective environmental

management plan reduces risk, providing assurance to stakeholders and often

delivering brand benefits.”


The way aheadFurtherresearchisnecessarytobetterquantifythebenefitsofcertificationbelievesToffel.“It’sinterestingthatdespitethewidespreadworldwideadoptionofISO9001andotherindustry-specificstandards,thereisvirtuallynorobustsystematicevidenceabouttheconditionsunderwhichthesestandardsbestdeliverontheirpromisetoultimatelydeliverconsistentlyhighperformance,whetheritbeforquality,environmental,orlabourconditions.Whileacademicresearchershavetheskillstoconductthisanalysis,theydon’thavedataontherelevantprocessandproductmetricsovertime.Iamseekingtoworkwithorganisationsthatarewillingtoshareinformationontheirownfacilitiesoroftheirsuppliers,overtime,beforeandafterthesestandardswereadopted.”

Asforthestandardsthemselves,Jamessays:“Inordertoremainavaluablebusinessasset,ISOstandardsneedtocontinuetoevolve,ensuringthatorganisationsofallsizes,complexitiesandlocationseeaclearconnectionbetweentheirstrategicobjectivesandtheirmanagementsystems.Itisnotjustaboutmeetingtherequirementsofastandardtoachievecertification;robustsystemsandprocessesneedtobeembeddedineverythingthattheorganisationdoes.”

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adoptersweresubsequentlymorelikelytoreportzeroinjurieswarrantingworkers’compensation.ThisrevealedthattheadoptionoftheQMSappearstohavesomespilloverbenefitsintermsofimprovingworkplacesafety.

TheCaliforniastudyalsofoundthatQMSadoptersweremorelikelytohavesurvivedseveralyearslater,comparedtothenon-adopters.Toffelbelievesthatthereareseveralpossibleexplanationsforthisfinding.“First,manybelievethatISO9001isaproxyforothergoodmanagementpracticesandthatbetterruncompaniesaremorelikelytosurvive.Second,becauseISO9001issooftenadoptedtoqualifyformoretenders,onemightexpectsalestoincreaseamongadopters,therebyenhancingsurvival–whichwasalsofoundinthestudy.Butineithercase,ourresultsindicatethatcompanieslookingforlong-termsupplierrelationshipscanuseISO9001asausefulpredictorofsupplierlongevity.”

Who benefits most? ProfessorToffel’sworkhasdemonstratedthatintermsofsalesandemploymentgrowth,smallercompaniesexperiencegreaterbenefitsfromadoptingISO9001thanlargercompanies.ThiscouldindicatethatsmallerfirmslearnmorefromadoptingISO9001orthatthestandardisparticularlyhelpfulinenablingsmallerfirmstofocusonquality.

Toffelspeculatesthatorganisationsinlessregulatedindustriesmightgainmorefromadoptingqualitystandards,comparedtoorganisationsinindustries–suchaspharmaceuticals–wherequalityisalreadyheavilyregulatedbythegovernment.“ThebenefitsofadoptinganEMSorQMSmightbegreaterincountrieswithweakerregulatoryenforcementbecauseadoptingstandardstomeetindependentthird-partycertificationcouldsparkaninvestmentinmanagerialattentionthatcansubstantiallyenhanceoperationaleffectivenessandefficiency”,Toffelnoted.

“our results indicate that companies looking for

long-term supplier relationships can use ISO 9001 as a useful predictor

of supplier longevity.”

Theprocessbywhichanorganisationachievescertificationinvolvesanassessmentprocessbyskilledassessorswhoexamineanorganisation’smanagementsystemstodeterminewhethertheymeettherequirementsofthechosenstandardorscheme.Theresultingauditreportandfindingshelporganisationsmanagetheirsystemsandriskstoimproveandprotecttheircurrentandfutureperformance.WhenanorganisationachievesapprovaltoastandardsuchasISO9001(QualityManagementSystem–QMS)itisknownas‘approved’,‘registered’or‘certified’.Accreditationbodiesindependentlyauditcertificationbodiestoensurethattheymeetastringentsetofcriteriaregardingthecompetencyoftheirassessorsandtheirmanagementofpotentialconflictsofinterest,forexample.Certificationthroughanindependent,accreditedcertificationbodyisoftenasourceofcredibilityandcompetitiveadvantageforcompanies.


The growth of carbon trading schemes in Asia

Governments across Asia are serious about reducing their industry’s contribution to climate change and increasingly

are turning to market-based mechanisms to reduce emissions. But it will take time for these schemes to come into operation and grow the stakeholder confidence they need to build scale, says Robert hansor.


D espiteitsimperfections,theEU’sEmissionsTradingSystem(EUETS)hasinspiredgovernmentsinAsiato

developtradingschemesoftheirown.And,by2020,whenanewglobalagreementonclimatechangewillbeimplemented,manybusinessesinAsiawillalreadybeoperatingnationalcarbonmarkets.

TherearealreadyoperatingschemesinJapanandNewZealand.Australia’scarbonpricingmechanismbeganinJuly:stillmoresystemsareemerginginChina,IndiaandSouthKorea,amongothers.Clearlygovernmentshavefounditeasiertoputinplacelegislationoftheirownatadomesticlevel,wheretheycontrolthelegislativeprocess,ratherthanhavingtonegotiateitontheinternationalstage.

ButitremainstobeseeniftheseschemeswillemergeasfullyoperationalemissionstradingprogrammessimilartotheEUETSandiftheycanbelinkedinternationally.Itwillnotbeeasy.Mostofthehostcountrieshavesignificantlydifferentpriorities,letaloneindustrial,economicandinstitutionalconditions;anddisparatedomesticstakeholdersarepushingandpullingtoformlegislationineachmarket.

SouthKorea,forinstance,issueditsnationalgreen-growthstrategyin2008buthasfaceddifficultdomesticoppositiontoitsproposedETS.Asastopgapmeasure,itimplementedagreenhousegasandenergytargetmanagementsystemandwaseventuallyabletopassitsETSlegislationinMaythisyearafterseveraldelays.

Pilots in ChinaThedraftregulationsfortwoofChina’ssevenregionalpilotprogrammeshavebeenissued,givingstakeholdersaninitialunderstandingofwhatcouldemerge.Thereisnotmuchinformationabouthowapricewillbeformedbut,withanationalcarbonmarketmootedfor2015/16,thisETSeventuallycouldbecometheworld’slargest.

ButwhileChinahasagreattrackrecordfordeliveringonwhatappeartobeostentatiousgoals,manyobserversappeardistractedbythescheme’spotentialand

aremissingtheenormouschallengesthatneedtobeovercome–chieflythatitishardtosaywhetherbusinesswillinvestincleanertechnologiesandprocessesforregionalpilotschemeswhichmaylastjustafewyears.Sothegoalduringthepilotstageshouldbetoprepareparticipantsfortheconditions,standardsandinfrastructurethatwillgovernChina’snationalETSratherthantogeneratehighvolumesoftrade.Itwillneedtomatureslowlyovertime.

Meanwhile,inJapan,turningtwonuclearreactorsbackontoeasepowersupplyproblems,despitewidelyreportedpublicconcerns,highlightstheenergydilemmafacingthecountryaftertheFukushimacrisislastyear.Tomeetitsemissionsreductiontarget,theuseofinternationaloffsetsmaybecomegreaterthanever.Itsproposedbilateraloffsetcreditingmechanismhopestogeneratemanyoftheseoffsetcreditsfromdevelopingcountriestohelpachieveitstarget.AsimilarconcepttotheUN’sCleanDevelopmentMechanism,itscreatorshopethatthesimplerprocesseswillmobilisegreaterlevelsofinvestment.Designedinparttoboostexporttrade,themechanismcouldbeaboonforJapanesebusinesses.

Also,bypotentiallytargetinglargequantitiesofoffsetsunderitsownprogrammebeforeanyothercountrytakessimilarsteps,Japanissecuringarelativelycheapsupplyofcredits.Initialprojectshavebeenidentified,feasibilitystudiescompletedandcapacitybuildingprojectsunderway.Oncetherulesareclarified,itsenvironmentalintegrityandtheimpactitcouldhaveontheinternationalcarbonmarketwillbebetterunderstood.

AndwiththesemultipleschemesinAsiaemerging,withavarietyofemissiontargets,standardsandgovernancemechanisms,talkisstartingofaregionalcarbonmarketbeingestablished.Butwithoutcommonstandardsandrules,itisdifficulttoseehowunitscouldbetradedbetweenthedifferentprogrammes;thewidelydifferingstandardswouldmaketransactionscomplexandcostly.Ifthefragmentedvoluntarymarketcanbetakenasareasonableguide,high-qualitycreditswillbedifficulttoidentifyandpriceswillvarywidely.

A common understanding neededPartoftheproblemisthattheseinitiativesareemergingincountrieswithdifferingeconomicconditionsandinstitutionalcapacities.Ifacommonstandardistoomuchtohopeforintheshortterm,forfutureeaseofintegrationandfungibilityofcredits,theemergenceofacommonunderstandingoftheprinciplesformonitoring,reportingandverification(MRV)arerequired.SimplebutadaptiveMRVregimesthatbuildtrustandconfidenceamongparticipantswillresultinstrongermechanismsovertime.

Inalargepart,thisdependsonthelevelofambitionamongthedifferentschemes’proponents.Ifenvironmentaleffectivenessistheprimarygoalthen,togetherwithAsia’scommitmenttoa2020globalscheme,thereshouldbecontinuedenthusiasmfornationallevelregimesandalsotimeandincentiveforcommonstandardsandapproachestoemerge.

Onethemewhichrunsthroughalloftheseeffortsisthedifferentexperiencesregulatoryarchitectshavehadintryingtoengagetheprivatesectorduringtheearlystagesofsystemdesign.Ultimately,Asianbusinesses–justliketheircolleagueselsewhereintheworld–needalong-termpricesignaltobeginthetransitiontousinglow-carbontechnologies.Inmanycases,thecreatorsofthesenewsystemshavebeenwellservedbysolicitinghighlevelsofinvolvementfrombusinessearlyon.

Foremergingschemes,theshort-termgoalshouldbetoachievemarketreadinesssotheirinitiativesgainsupportfromparticipants.EstablishingcommonprinciplesforMRVisoneofthefirstimportantstepstoprovidingthekindofconsistencythatbreedsstakeholderconfidence.Oncethisisachieved,thelong-termchallengeistosetambitiousreductiontargetsthatstimulatethedemandforcarboncreditsandreleasegreaterlevelsoflow-carboninvestment.

Robert hansorisHeadofClimateChange&Sustainability–[email protected]


Lloyd’s Register has acquired houston-based WEST Engineering Services in a move that secures the Group's position as the premier independent risk management organisation supporting the global offshore drilling industry.

“TheacquisitionofWESTfurtherexpandstheglobalportfoliooftechnicalserviceswecanoffertothedrillingsector,buildingontheworld-classsupportwealreadyprovidethroughourEnergyteamwhichincludestheModuSpecGroup,ODSandtheScandpowerGroup,”saidJohnWishart,Lloyd’sRegister’sEnergyDirector.“Wearenow,withoutquestion,theindustry’sleadingindependentprovideroftechnicalsupportforsafeandenvironmentallyresponsibledrillingoperationsastheworldcontinuesitssearchfornewenergyresources.”

[email protected]

nuclear power expertise

New

s up

date WEST

Engineering Services joins Group

A new appointment and acquisition in India illustrate Lloyd’s Register’s response to rising demand for technical assurance services in the nuclear power sector.

Mumbai-basednuclearriskspecialists,ReltechConsulting,whichprovidessafetymanagementservicestoamultinationalcivilnuclearclientbase,havebeentransferredtothenewlyformedLRScandpowerRiskConsultancyPvt.Ltd.“BuildingastrongerlocalpresencegivesustheadditionalmanpowerandtechnicalresourcesweneedtoservetheexpandingIndianmarketandourglobalnuclearclients,”saidBjornIngeBakken,ChiefExecutiveoftheScandpowerGroup.

AndwehaveappointedtheinternationallyrespectednuclearsafetyexpertProfessorMamdouhEl-ShanawanyasBusinessLeaderforNewNuclearOpportunities.HejoinsusfromtheInternationalAtomicEnergyAgency(IAEA),wherehemostrecentlywastheagency’sHeadofSafetyAssessmentfortheDivisionofNuclearInstallationsSafety.HewasresponsibleforstrengtheningtheabilityofIAEAmemberstatestoassessthesafetyoftheirnuclearinstallations.TheteamwereawardedtheNobelPrizeforPeacein2005.

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Ambrey Risk’s quality first AmbreyRisk,theinternationalmaritimesecurityspecialist,hasbecomethefirsttoachievecertificationtoISO9001:2008fortheprovisionofmaritimesecurityservicesforvesselswithLRQA.CommercialDirector,ShaunWebberstated,“Wewanttosetthebenchmarkforregulatorycomplianceandprofessionalisminmaritimesecurity,soLRQAwithitsstrongmaritimecredentialsasasubsidiaryofLloyd’sRegister,wastheobviouschoiceforus.WearethereforedelightedtobethefirstintheindustrytogaincertificationtoISO9001withthem.”

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Marine wind energy project Lloyd’sRegisterhasjoinedforceswithTotempowerEnergySystemsandZodiacMaritimeAgenciestoassessthepotentialofwind-generationdevicesonboardcommercialshipsasthemaritimeindustrystepsupitspursuitofviablecarbon-alternatefuels.

Afullyautonomouswind-monitoringsystemdesignedandassembledbyTotempowerhasbeeninstalledontheZodiac-managedbulkcarrierCape Flamingo.Theprojectwillidentifyandmeasurethepotentialgeneratingcapacityfromwindpowerfortheship’stradingpatterns.Thedatawillbeusedtosupportthedevelopmentofcomputationalfluiddynamics-basedsimulationmodelsthataresuitableforpredictingthepotentialenergyyieldsonotherZodiacships.

E [email protected]

London Crossrail roleThelargestengineeringprojectcurrentlyunderconstructionanywhereinEurope,London’sCrossrailscheme,willinvolveLloyd’sRegisterworkingonthecentralsectionofthescheme.Ourroleasthenotifiedbodyextendsacrossthedesign,construction,testingandcommissioningofthesection’svariousstructuralsubsystems,includingthe21kilometresoftwin-boretunnelsthatwillstretchfromthewestofthecity,throughtoStratfordintheeastandsouth-eastLondon.

Europeanlegislationrequiresthatmainlineraildevelopments,suchasCrossrail,areconstructedtocommonstandardssopromotingasinglemarketbyremovingtechnicalbarrierstothesupplyofequipmentandtherunningoftrainsbetweenmemberstates.Asnotifiedbodywewillhelpensurethenewcentraltunnelsectionwillbecompliantwiththislegislationconcerningtheinteroperabilityofrailwayoperations.

E [email protected]

Groundbreaking rules for FLnG Lloyd’sRegisterhasuseditstechnicalknowledgeandexperiencetopublishtheworld’smostcomprehensiverulestoguidethedesign,constructionandoperationoffloatingliquefiednaturalgas(FLNG)facilities.

“Naturalgasisakey‘fuelforthefuture’anditssafeandeconomicproductionwillbecomeincreasinglymoreimportant,”saysJohnRowley,President,Lloyd’sRegisterAsia.“TheFLNGfacilitieswehaveworkedontoformtheseruleswillbethebiggestfloatingstructureseverseenandinthecomingdecades,theywillallowustounlocktheworld’sstrandedoffshorenaturalgasreserves.Theyareessentialtotheworld’sfutureenergymixandLloyd’sRegister’sexperienceandknowledgeisintegraltotheirsafe,sustainableandeconomicoperation.”

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“Natural gas is a key ‘fuel for the future’ and its safe and economic production will become increasingly more important”


Loss prevention. how prepared are you?It’syourpeople–yourequipment–yourprocess–yourbusinessreputation

Chooseyourworld-leadingauthorityonsafety,assetreliabilityandbusinessperformancetosupportasaferandmorereliableenergyindustry.

Applyourexpertise:visitwww.lr.org/energy

Lloyd’sRegister,LRQA,ScandpowerandModuSpecaretradingnamesofLloyd’sRegisterGroupLimitedanditssubsidiaries.Forfurtherdetailspleaseseeourwebsitewww.lr.org/entities

insight issue 5 sept 2012

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