1. That sinking feeling
3. Welfare and support
4. Bursary fund
5. Gas Ares report
6. Wind assistance
7. Firefighting imperative
8. Energy transition
9. Global resilience
10. Sustainable shipping
11. ISM course
12. Seafaring skills
13. Maritime Battery Forum
14. Vessel operating costs
15. Trapped ships
16. Zero ready
Notices & Miscellany
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1. That sinking feeling
By Michael Grey
The unsurprising news that the UK’s so-called Royal Yacht, which was one of the least ambitious projects proposed, only months ago, by ex-Prime Minister Boris Johnson, would not now go ahead, will have provoked mixed emotions. Those who laboriously worked up a number of conceptual designs on behalf of the hopeful consortia which hoped to build the vessel, will be naturally disappointed at the sinking of their ambitions. The not inconsiderable grass-roots support for the replacement vessel, harboured by those who retained residual feelings of resentment at the Blair government’s withdrawal of the elegant Britannia (and the republican cabal behind it) will probably be unconvinced by the Conservative government’s volte face.
The designs, or at least those which were made public, were a mixed bag, ranging between the decidedly futuristic and what can only be described as “cut-price traditional”. Realists, along with those who have been following the saga of the Scottish ferries, know that a budget of £250million really doesn’t buy you much in a shipbuilding contract these days.
Few sensible people, who are now grimly aware of the economic future of their austerity-hit country (and this is being written before this Thursday’s Autumn Statement by the Chancellor of the Exchequer), will suggest that the cancellation was unwise. It has been sweetened perhaps by the news that the Royal Navy will instead get hold of one or more useful craft to keep a watchful eye on our undersea pipes and cables.
The procurers of the MoD won’t like to admit it, but you can probably buy something almost off the stocks, or with one careful owner, from the offshore sector, requiring merely a coat of grey paint and possibly, a gun. SeaForce One will thus give way to HMS Underseaforce and a sister, for which there is a clear need, if we want to keep the cables and pipelines safe. The admirals, who really didn’t want the manning and management of a yacht, will be happy to get hold of something they really do need. One can only guess at the reaction of His Majesty, who will not now have to express any opinions about the interior furnishings or fittings, which he was going to have to share with a rolling series of government ministers and trade officials, all putting their oars in.
It might seem awful to write such things, but there will also be a certain amount of unspoken relief that the yacht or government ship – call it what you will – has been consigned to the archive of unfulfilled shipbuilding ambitions. It will for a start, avoid all the necessarily protracted and painful choice of where to build the thing, as experienced Royal Yacht builders have become thin on the ground in this Kingdom. It would probably have become a battle between two equally inexperienced contenders, possibly ending up with the bow being constructed in Belfast and the stern on the Mersey. Angst would be guaranteed. The financial risk to either, or both yards, should not be underestimated, as the massed bands of supervisors, project managers and bureaucrats proliferated throughout the building programme. It has been a very long time since a yard in this country built a “one-off” ship and emerged with a profit on the contract.
And if anyone doubts that the choice of constructor would be sorted out amicably, forgetting the fiasco of Ferguson in Scotland, consider the rage that is currently seething in Birkenhead since it was announced in Liverpool, that the new ferry for the river Mersey was going to be built by Damen. Trouble -free and timely construction might seem a priority, but does not necessarily come without local politics intruding. When it arrives, the locals will probably refuse to sail on it, preferring to wait at the Pierhead in the rain for the older, but locally built variety, to come along.
If you are looking for some historical insights into Royal Yachts, in the absence of current ones, there is a splendid article in the latest IMarEST journal Marine Professional, written by naval architect John Barnes. He recounts that Queen Victoria, who seemed to be always building newer and bigger royal yachts throughout her long reign was never hard pressed to find a willing shipyard. Her final vessel, the 3rd Victoria & Albert of 1899 had to incorporate so many of the fittings and furniture from the earlier vessels, that she became unstable and took a worrying list when fitting out. My edition of Hofman’s Steam Yachts makes the obvious point about this alarming event that “it is always difficult to reject the request of an owner, especially if the owner is the Sovereign”. At least shipbuilders will now be spared such embarrassment.
Michael Grey is former editor of Lloyd’s List.
A new report compiled by maritime innovation consultancy Thetius makes the case that shipping companies seeking to meet current and emerging challenges facing the maritime industry will benefit from a strategic approach to connectivity. Published by Inmarsat, The Network Effect: Strategising Connectivity at Sea for Maximum Impact, also provides guidance on effective connectivity framework strategies.
The Network Effect details the business benefits and specific capabilities that shipping companies can access by applying an effective connectivity strategy across their business IT, crew, and operational networks. These include voyage and port-call optimisation, emissions reduction, condition monitoring and condition-based maintenance, trade facilitation, seafarer welfare and training, remote surveys and pilotage and telemedicine services.
Matthew Kenney, director of research and consulting at Thetius, said “Against a backdrop of evolving regulatory requirements and increasing emphasis on seafarer welfare, connectivity and data are indispensable to shipping company competitiveness. However, simply purchasing data is no longer enough. If shipowners are to reap the full rewards of operational optimisation, decarbonisation and a loyal and talented crew the right connectivity strategy is essential.”
According to the report, once a shipping company has established its objectives and identified the capabilities needed to achieve them, it will benefit most from finding the right combination of communication services to best support those capabilities. By joining the dots between business goals and connectivity options, operators gain access to a host of benefits including opportunities to optimise and drive efficiency, while reducing running costs and improving profit margins; the ability to attract and retain talented crew; and the capacity to future-proof operations and build in competitive advantages.
Ben Palmer, president, Inmarsat Maritime, said “Ultimately, a good connectivity strategy relies on a clear understanding of the company’s business goals, the technologies needed to attain those goals, and any additional influencing factors such as resource availability and investment requirements. In that sense shipping is no different to any other industry: collecting, collating, analysis and harnessing the value of data relies on resilient, reliable, secure, globally available connectivity services. It is also critical to recognise that implementing a connectivity strategy is a continuous and iterative process that requires constant monitoring, frequent reassessment, and regular feedback from internal and external stakeholders. As this report makes clear, this is both necessary and highly valuable to modern shipping operations both in terms of driving competitive advantage and addressing decarbonisation goals.”
Available to download here, The Network Effect: Strategising Connectivity at Sea for Maximum Impact concludes with step-by-step instructions and best-practice guidelines on how to develop and implement a successful connectivity strategy.
3. Welfare and support
As the International Seafarers’ Welfare and Assistance Network (ISWAN) reports a high demand for its helpline services over the last year, it is clear that accessible welfare and support services for seafarers worldwide remain a priority for the maritime industry.
In its annual review covering the year to 31st March 2022, ISWAN reports that the total number of calls and messages handled by its free, 24-hour, international helpline SeafarerHelp was still 81% higher during the last financial year than before the pandemic in 2019/20. Demand for ISWAN’s helpline for crew working in the superyacht industry, Yacht Crew Help, has also grown steadily since its launch back in November 2020, and ISWAN now operates 16 bespoke helplines for companies and organisations in the maritime industry, adding five new helplines in the last year.
The most common reasons for seafarers and their family members contacting SeafarerHelp included requests for information (including health-related enquiries about Covid-19 and ISWAN’s Covid-19 vaccination drive in India) and financial or debt problems, with many seafarers enquiring about financial support administered by ISWAN for those affected by Covid-19 and Typhoon Rai in the Philippines. At the end of March 2022, ISWAN also launched the Ukraine Crisis Support Fund on behalf of the Seafarers International Relief Fund in response to the war in Ukraine.
With seafarers facing challenges ranging from personal struggles to global crises, seafarers’ mental health remains a key area of work for ISWAN. Stakeholders from across the shipping, superyacht and cruise ship industries continue to approach ISWAN to deliver its Mental Health Awareness Training for the Maritime Industry to their shoreside and seagoing staff. ISWAN’s Social Interaction Matters (SIM) Project also completed its trials of social interaction initiatives on board merchant vessels in 2021 and the project’s Phase Two report, recommendations and guidance for the industry have since been released this year.
ISWAN is working to make free support more accessible for seafarers around the world, especially those with limited connectivity on board. To complement its existing services, the organisation launched the ISWAN for Seafarers app in June 2021 in partnership with The Shipowners’ Club. The app offers a direct line to ISWAN’s helplines and offline access to resources for seafarers, and was downloaded over 2,800 times in the last financial year alone by seafarers of 70 nationalities.
The ISWAN 2021-22 Annual Review can be downloaded here.
4. Bursary fund
The recently-published report by the MCG Redundancy and Retraining Bursary Fund shows that in total 105 seafarers, who lost work due to Covid-19, were granted help with the cost of training. At least half of them have secured another job in maritime.
Launched in November 2020 at the height of the Covid pandemic, the MCG bursary fund offered support to UK-based seafarers who had been made redundant or lost a contract and needed help towards the cost of training to stay in the industry. The scheme was funded by the Merchant Navy Welfare Board (MNWB), Trinity House and the Nautilus Slater Fund, and administered by the Marine Society on their behalf. It closed to applicants on 16th September.
In just under two years the MCG bursary fund awarded almost £48k to seafarers from all parts of the industry: the highest number of applications came from the offshore sector (28%) followed by ferries (23%) and deep sea (22%). The remainder were mostly in the cruise or yachts sector. More officers than ratings applied and most applicants were male, with only seven applications from female seafarers.
The courses they applied for were varied: half of all applicants needed funding to refresh their STCW qualifications, and about a third wanted to upskill their at-sea qualifications or gain jobs in a different sector of the industry such as off-shore wind and renewables. The age of applicants was fairly evenly spread with just over a quarter aged 25-34 and around a third aged 35-44. 17% were aged 55 or over and 10% were under 25.
5. Gas Ares report
The National Transportation Safety Board has issued its report into the cause of the collision between LPG carrier Gas Ares and a tug.
A state licensed pilot from the Sabine Pilots took navigational control of the Gas Ares as it was heading to a loading dock on the Neches River. Due to wind conditions, the pilot planned to have an escort tug for the transit through the Sabine Neches Canal and Neches River.
After the pilot arranged a passing with a tow, the pilot ordered the Gas Ares to dead slow ahead to avoid making a wake as the carrier passed a pipeline removal project to starboard near the shoreline (outside of the navigation channel). Winds were strong on the carrier’s starboard side, slowly setting the vessel—which was already on the left side of the 400-foot-wide channel for the passing arrangement with the tow—further toward the left side of the channel toward vessels moored at docks on that side of the channel.
With the reduction of the ship’s speed, the Gas Ares’s rudder became less effective, and was not able to move the vessel to starboard and away from the moored vessels on the left side of the channel by rudder and engine alone or by using the escort tug to pull on the vessel’s starboard quarter. Without enough headway, the pilot was unable to steer the vessel back to the centre of the channel and avoid striking the outboard moored tug.
The NTSB determined the probable cause of the collision was the pilot’s decision to reduce the vessel’s speed in order to create less wake when passing a pipeline removal project, causing a loss of rudder effectiveness in strong crosswinds that set the carrier toward moored vessels.
Marine Investigation Report 22/27 is available online.
6. Wind assistance
Classification society DNV has released an update to its Wind Assisted Propulsion Systems (WAPS) technical standard (ST-0511). The update introduces new methods for evaluating WAPS fatigue strength, as well as the performance of the systems in extreme conditions.
Wind Assisted Propulsion systems (WAPS) are one of the most promising measures to assist the decarbonisation of shipping, according to the class society.
While experience in using the systems is still developing, WAPS have already been implemented on commercial vessels and can enable fuel savings of up to 20%. The new updates to DNV’s technical standard (ST-0511) will support the growing interest in WAP systems as the industry looks to enhance sustainability and reduce fuel consumption in a tightening regulatory and economic climate.
“As we continue to build experience on WAP systems, and as new systems come onto the market, the case for owners who are looking at these systems as part of their efficiency and sustainability strategies grows stronger,” said Hasso Hoffmeister, senior principal engineer at DNV Maritime. “Our customers are extremely focussed on maintaining compliance with the incoming GHG reduction targets and are seeing that WAPS can make a valuable contribution in this respect.”
DNV says the interaction of WAPS with the structure of a vessel’s hull can be quite complex, so the update features a comprehensive new section on fatigue strength, including calculations that offer a completely new approach to derive the load combinations from the wind and inertia forces on WAP systems. In addition, the standard sets out a new approach to assessing how WAPS perform under extreme wind conditions.
“We have recently seen the announcement of several lighthouse projects, which are taking WAPS further and will further showcase the potential of the wind as both primary and additional propulsion for a modern cargo vessel” Hoffmeister said.
The WAPS ST-0511 standard provides a framework for the verification and certification of wind assistance propulsion systems. It can be applied in obtaining an Approval in Principle, a Design approval or a Type approval. These verifications and certifications can also be obtained as part of the integration into a vessel or independently. The ST-0511 technical standard is a complement to the DNV WAPS class notation, which is focussed on the integration of systems onboard vessels, whether retrofitted or as part of a newbuilding.
DNV has officially joined the International Windship Association with the intention of using its membership status to support and accelerate the uptake of wind-assisted propulsion systems by the global shipping fleet.
7. Firefighting imperative
Regulation and improving fire-fighting techniques have proved inadequate to stem the tide of serious incidents costing lives, significant cargo losses and ship damage, according to the TT Club.
The freight transport and logistics insurance specialist insurer is continuing its battle to convince cargo interests, supply chain professionals and enforcement agencies that the responsibility for mitigating container ship fires is shared by numerous entities involved from end to end of the entire global supply chain. With its estimated sixty-day average occurrence of serious fires being maintained by the Zim Charleston fire in August and the TSS Pearl in the Red Sea in early October, TT is once more urging a more comprehensive approach to arresting the trend.
“There were significant lessons coming from the sad incident on the MSC Flaminia, which cost the lives of three seafarers, particularly from the subsequent legal proceedings that adjudged the shipper and NVOC responsible for root cause errors,” says TT’s Peregrine Storrs-Fox. “Despite the biennial updates to the IMDG Code, including multiple arising from this particular incident, the judge’s assessment that the regulations merely set the ‘baseline’ for good practice remains utterly true today.”
Ensuring compliance with the latest mandatorily applicable version of the IMDG Code is essential as a minimum standard for all those shipping dangerous goods by sea. But the liability judgment in the MSC Flaminia case made it clear that regulations merely set the baseline. “This is an important statement to which any entity inclined to rely solely on the letter of the law when consigning dangerous goods, would do very well to pay heed,” comments Storrs-Fox.
TT advocates a comprehensive approach, striving to bring an understanding of all the factors contributing to these fires to everyone involved in the movement of cargo in containers and therefore underlining their responsibilities for safety. Errors, misunderstandings, mis-declarations and inadequate packing and securing lie at the heart of many significant incidents, both at sea and in storage facilities. Movement of cargo is initiated in the trading of goods – sellers and buyers – who instruct packers and whoever becomes the shipper. They have a duty of care as much as the packers, warehouse operators, forwarders, logistics companies, carriers of all modal types, cargo handlers and terminal operators. Attention to accurate classification and declaration are critical to improve certainty of outcome from end to end. This requires truth as much as awareness of regulations and sound safety practices.
Along with its sister insurer, the UK P&I Club the TT Club has recently up-dated its guideline publication, ‘Book it Right, Pack it Tight’. This provides key insights for all involved in dangerous goods’ shipments, including a clear exposé of the more technical aspects of the IMDG Code. The aim is to influence higher standards of compliance by assisting all involved to understand their own duties and the duties of their contractual partners.
Closely related to the issues specific to dangerous goods are the broader aspects of packing cargo in general. While the IMO/ILO/UNECE Code of Practice for Packing of Cargo Transport Units (CTU Code) remains non-mandatory in international law, it is clearly referenced from the IMDG Code. Through its participation in the Cargo Integrity Group, TT has contributed to work on the ‘CTU Code – a quick guide’. Once more this has been recently updated and assists those responsible for packing containers, accurately declaring details of their contents in order to access the guidance contained in the voluminous CTU Code itself more easily. There is also a useful Checklist of actions required, which along with the Quick Guide is available in multiple languages.
TT’s campaign to influence all parties continues with a series of Webinars early in 2023 on the subject of container ship fires and the on-going efforts to prevent them. The aim is to attract awareness and debate particularly around innovations that could materially improve the risk, including a number of those whose efforts have been recognised through the TT Club Innovation in Safety Awards over recent years.
“The complexities of the global container trades increase rather than diminish,” concludes Storrs-Fox. “No one entity can surmount the dangers of these horrific fires, as a consequence it is essential that the entirety of the risk faced should be embraced by all involved through the supply chain if they are to be successfully reduced.”
8. Energy transition
The International Association of Ports and Harbors (IAPH) Clean Marine Fuels Working Group has published a total of six new checklists which cater for both ship-to-ship and truck-to-ship bunkering operations of liquefied gasses as a marine fuel at ports. Following the work of the members of the working group, these checklists, which are applicable to LNG and liquefied biogas, but also to liquid hydrogen, will contribute in a very concrete way towards the energy transition of shipping.
The harmonised bunker checklists reflect the extra requirements of ports about safe bunkering operations of alternative marine fuels in or near their port environment. By using such bunker checklists, a high level of quality and responsibility of the bunkering operators can be obtained. They will also be of great benefit to vessels and their crews bunkering in other ports because it will reduce the potential confusion caused by having to comply with different rules and regulations in different ports. The checklists can be obtained by registering, accepting terms and conditions and then downloading the checklists from the IAPH Clean Marine Fuels Working Group portal.
9. Global resilience
The Global Resilience Index Initiative, to be fully launched at COP28, will provide open reference data, metrics and projections of all countries worldwide. This critical missing layer of the world’s information architecture is key to reshaping development, managing risk and saving millions of lives and livelihoods – both in our climate today and decades ahead.
The Global Resilience Index Initiative (GRII), a multi-partner taskforce, announced during the COP27 World Bank Plenary Session on 12th November identifies key milestones in its development towards an open, standard set of climate metrics and data to measure risks to communities, infrastructure and ecosystems. This informs how resilience is built, and societies and economies adapted to climate change, as well as mobilising the trillions of dollars necessary to build resilience.
GRII is a global public-private partnership to address the climate data emergency with consistent, accessible and reliable risk information for use by governments, the financial sector and wider communities.
The public and private sector GRII partners have already announced:
- The launch of the GRII demonstrator, the GRII Viewer, providing the initial set of ‘people’ ‘planet’ and ‘prosperity’ indices to guide financial decisions to scale up adaptation.
- The release of a UN report underlining the case for the GRII: Towards a Climate Risk Data Architecture: Common and Open Risk Metrics to Align Finance with Climate Resilient Development Goals, (published by United Nations office for Disaster Risk Reduction (UNDRR) and the Centre for Green Finance and Investment (CGFI).
- At COP27, the GRII has called on innovators and data providers worldwide to support the scaling and improvement of this initiative, as well as engagement from more pathfinder institutions and governments. The race for data is a critical part of the race for resilience, and accessible climate risk indices must be made available to financial systems and economies.
Patrons of the GRII initiative – which was convened by the cross-sector Insurance Development Forum and first announced at COP26 – are Mark Carney, UN Special Envoy on Climate Action and Finance; Mami Mizutori, Assistant Secretary-General and Special Representative of the Secretary-General for Disaster Risk Reduction in the United Nations Office for Disaster Risk Reduction (UNDRR); and Eric Andersen, Member and Risk Modelling Champion Insurance Development Forum Steering Committee and President, Aon.
The adaptation financing gap is widening. The most recent UNEP Adaptation Gap report found that for developing countries, estimated adaptation costs – and likely adaptation financing needs – could be five to ten times greater than current international adaptation finance flows.
10. Sustainable shipping
P&I insurer Standard Club has laid out its vision to support its members’ sustainability goals with the launch of its first sustainability impact paper.
The London-headquartered insurer released the report, entitled ‘Planet | People | Performance’, on 10 November as it looks to reduce the direct and indirect impact it has across areas of its operations and services.
The report breaks down the Standard Club’s strategy into two key impact indicators. The first focuses on how the club will work with its members to help create more sustainable services and practices, while the second indicator details how it plans to make its own operation more sustainable.
“While the shipping industry has been discussing sustainability for more than a decade, insurers have only relatively recently considered the potential impact on their business,” said Jeremy Grose, Standard Club’s Chief Executive.
“This sustainability paper sets out our ethos and agenda for positive and sustainable change – covering the insights and advice we offer our members to support their drive to sustainability, and how we are putting our own house in order to fulfil our greener goals,” he added.
The strategy includes several key measures to support sustainability goals, including developing and using emerging technologies, supporting the offshore and renewables sector, supporting seafarer wellbeing and committing to helping members make a transition to greener energy solutions through its Alternative Fuels Working Group. The report also sets out the club’s commitment to sustainable claims and casualty response techniques.
All the initiatives outlined in the report are aligned with seven of the United Nation’s 17 Sustainable Development Goals and are designed to support the club’s members by mitigating risks, boosting safety and supporting sustainable practices.
“Our sustainability strategy has been developed by experts from across the club, including claims, underwriting, loss prevention, risk and compliance. Our work has identified areas where we are already strong, where we need to be stronger, and what we need to do over the next 10 years to improve our sustainability efforts further,” said Edward Morland, Head of the Standard Club’s Sustainability Working Group.
One key element of the strategy is supporting seafarers’ well-being. The club helps its members to support seafarer well-being by sharing best practice, undertaking detailed research through its participation in the Seafarer Happiness Index and is a significant supporter of a number of seafarer charities.
The strategy also highlights how Standard Club has already worked with its members to create practical measures to support local sustainability efforts. These include working with specialised recycling experts to convert hazardous waste into alternative materials following a container ship fire and how the club supported local contractors and volunteers in the wake of a loss of containers in an environmentally sensitive area by giving them equipment and infrastructure, but allowing them autonomy in their conduct.
The launch of Standard Club’s Impact Paper follows the release of the International Group of P&I Clubs’ plan to leverage the collective strength of the entire marine insurance industry and the 90% of ocean-going tonnage they represent to further enhance sustainability efforts.
A copy of the report can be downloaded from: https://www.standard-club.com/fileadmin/uploads/standardclub/Documents/Import/Sustainability_Report/Planet_People_Performance_Impact_Report_2022.pdf
11. ISM Course
The Nautical Institute has announced details of its new short course ‘ISM Lead Auditor’.
The course is an intensive five-day remote course, designed to give participants the expertise and understanding required to conduct a full audit of an organisation’s Management Systems in the role of Lead Auditor dedicated to the ISM Code.
Fulfilling the requirements of IMO Model Course 1.30, the course is predominantly theory based, with guided practical exercises that introduce the participants to a varying number of scenarios. The course covers:
• ISM Code – overview of specific parts (as required)
• Auditing methods/timetable/scope
• The audit process
• Questioning auditees
• Non-conformities and observations
• Follow-up and audit completion
Upon completion of the NI course, candidates should be confident in planning and preparing for an audit, conducting an audit, and subsequently understand how to follow up on an audit. Successful candidates receive a qualification QR code and card for presentation on ships.
Steve Window, The NI’s head of qualifications, said: “We have been rapidly expanding our Short Course portfolio in the past 6 months and are pleased to be able to offer the ISM Lead Auditor course. There has been enormous industry demand for an audit structure for implementation of Safety Management Systems and we are expecting that the course will be particularly popular with those mariners who have the professional knowledge and experience to undertake audits.”
Find out more by visiting https://www.nautinst.org/ni-academy/short-courses/ism-lead-auditor.html
12. Seafaring skills
A new Action Plan, launched at COP 27 by UN organisations, shipowners and unions, sets out recommendations to upskill seafarers to meet shipping’s decarbonisation goals. The plan is in response to findings from new research, the modelling of which cautions that as many as 800,000 seafarers will require additional training by the mid-2030s.
Currently accounting for 3% of global emissions, shipping needs to move away from conventional fuels towards alternative low- and zero-carbon fuels and technologies to meet the world’s target of keeping global warming to 1.5C or less by 2050.
The three emission reduction scenarios assessed in the research highlight an immediate need to start putting the training infrastructure in place, to ensure hundreds of thousands of the world’s nearly two million seafarers are upskilled and empowered through the transition.
Findings also suggest that a lack of certainty on alternative fuel options is having knock-on effects for seafarer training, as the global maritime community works towards a clearer decarbonisation pathway in a post-fossil fuel era.
The research was conducted by leading maritime consultancy DNV and commissioned by the Maritime Just Transition Task Force Secretariat. The Maritime Just Transition Task Force was formed to ensure that shipping’s response to the climate emergency puts seafarers and communities at the heart of the solution
In response to the training challenge that the modelling lays bare, the Action Plan makes recommendations for industry, governments, seafarer unions and academia (including training providers). These recommendations include:
● Strengthening global training standards
● Ensuring a health-and-safety-first approach
● Establishing advisory national maritime skills councils.
13. Maritime Battery Forum
Classification society Bureau Veritas (BV) has joined the Maritime Battery Forum (MBF), a global network aimed at supporting the development and deployment of batteries within the maritime industry.
Being part of the Forum will enable BV to collaborate on the development of a standardized safety framework for on-board batteries, together with other companies and organizations from different parts of the battery value chain. Moreover, membership will give BV the opportunity to join key partnerships, such as the Battery Safety Joint Industry Project (JIP) to help accelerate the ramp-up and adoption of on-board battery systems.
Batteries present unique opportunities for shipping, as the industry explores a variety of options to support its decarbonisation ambitions and ensure compliance with new emissions reduction regulations. This fast-evolving market can give ship owners a competitive advantage, enable shipyards to gain expertise, and open new markets for equipment manufacturers. However, challenges remain to be addressed on the key aspects of safety, cost, installation and battery lifecycle. BV considers batteries and hybrid electric propulsion as relevant decarbonisation solutions for a number of cases in the shipping industry.
Paul Delouche, Director of Strategy & Advanced Services at Bureau Veritas Marine & Offshore, commented: “Batteries are part of the growing list of solutions to achieve carbon-neutral shipping. We are very pleased to join the MBF. Being a member will enable BV to expand our expertise in this fast-moving area. Our role as a class society is to bring together different stakeholders and help find solutions for the industry. The Forum is a perfect opportunity for us to help accelerate the technologies and their integration onboard large vessels.”
Bureau Veritas has created Rules for battery-powered ships, which are updated every six months to reflect the latest technical and safety developments. BV currently offers three notations for battery-powered vessels: Battery System covers the safe installation and use of batteries, Electric Hybrid is for vessels using a combination of diesel engines and batteries, and the Electric Hybrid Prepared notation is for ships designed to have batteries installed in the future.
14. Vessel operating costs
Vessel operating cost inflation has accelerated in 2022 on mounting worldwide macroeconomic price pressures, despite some receding of Covid-19 related costs, according to the latest Ship Operating Costs Annual Review and Forecast 2022/23 report published by global shipping consultancy Drewry.
Drewry estimates that average daily operating costs across the 47 different ship types and sizes covered in the report rose for the fifth consecutive year to reach $7,474 in 2022, a rise of 2.2%. This compares with a much smaller 1.3% increase last year and a pre-pandemic trend of flatlining or declining costs. While broader pricing pressures remain, vessel opex inflation is forecast to moderate over the medium term.“The rise in opex was driven mainly by price inflation in goods and services across the shipping sector, as well as supply chain disruption induced by the Covid-19 pandemic,” said Latifat Igbinosun, head of vessel opex research at Drewry. “Cost inflation was restrained last year, especially for repair and maintenance, as owners took advantage of the resumption in trade growth and rising vessel earnings to keep ships in service for longer. However, vessels returned to yards this year, pushing up costs.”
A high proportion of the 2022 opex increase was driven by lubricating oil costs, which surged 15% due to limited refinery supply and high oil prices. Costs also increased for marine insurance cover which rose 8% on average, following a 7% uplift in 2021, driven by a hardening insurance market and higher vessel values in some sectors which pushed up H&M premiums.
Cost inflation was also evident in other opex headline items. For instance, dry-docking costs rose 6% in 2022 due to limited slots as shipyards opted for profitable new orders and retrofitting projects. Meanwhile, stores and spares costs increased 2% apiece, while manning costs flatlined due to the unwinding of some Covid-19-related costs.
The rise in costs was broad-based across all the main cargo carrying sectors. The latest assessments include vessels in the container, dry bulk, product, crude, LNG, LPG, general cargo, reefer, ro-ro, and car carrier sectors.
Looking ahead, over the near term, a slowdown in many seaborne trades is anticipated with the exception of the energy-related commodity trades such as oil and gas, which will significantly affect available budgets for spending on vessel operations over the next few years. Drewry expects downside pressure on costs to remain in those areas where vessel owners have greater control, but tightening seafarer availability and ongoing decarbonisation regulations are expected to add to owners’ cost burden over the medium term.
“The outlook for vessel operating costs remains uncertain, given ongoing geopolitical risks, rising inflationary pressures and deteriorating economic outlook,” added Igbinosun. “But Drewry forecasts some moderation in opex inflation as pressures on certain cost heads such as marine insurance and dry docking recede, despite the risk of rising seafarer wage costs in light of a looming officer shortage.”
15. Trapped ships
Marine markets face a profusion of “total loss” claims for trapped ships early in 2023, one year after the shut-down of Ukrainian ports, a London audience of practitioners has been alerted.
Ukrainian ports have been closed for vessel entry and exit since February 25, 2022, the day after the Russian invasion, and mines are reported to have been laid, effectively blocking as many as 100 vessels in ports and up rivers. The full value of vessels trapped is unclear, but it could be as much as $800m to $1bn.
At the time of the invasion many of the vessels had war risks policies, but on February 24 war risks insurers began to use their right to demand extra premium to extend the cover.
A market briefing this month, organised in London by the Association of Average Adjusters and the International Underwriting Association, highlighted the depth of the marine insurance issues involved, and to emphasise this it was entitled Do Mention the War!
Burkhard Fischer vice-chairman of the Association of Average Adjusters and a partner with Albatross Adjusters in Limassol, joined with Jonathan Bruce a partner at HFW LLP and deputy head of his firm’s global insurance and reinsurance group, to survey key Issues over the detention of ships. Among debatable matters is premium charged for a vessel after it has been seized, arrested, or detained.
Bruce said of the current blockage at the ports: “This is a novel situation and there is therefore quite a lot of uncertainty. Unless things change quickly, it seems likely that there will be a lot of deemed total losses all in one ‘clump’ next February, and some quick decisions will need to be made. Most likely, disputes can be avoided through sensible discussion and creative solutions, but there is potential for flies in the ointment, for example if vessels get destroyed by missiles. There are likely to be disputes also with reinsurers about what is considered the number of occurrences.”
He said that if trapped vessels were on charter, extra premium might have continued to be paid but over time that would presumably have stopped and most of the policies lapsed or been cancelled. In some cases, loss of hire has probably been paid by war risks insurers, but such payments were subject to limits. In many instances crews will have been evacuated, leaving only a few members for maintenance.
One Bangladeshi vessel had been hit by a missile, and there was a real possibility of others being hit. When ships sought to escape in due course, they could be damaged or sunk by mines. Some might also be taken over by Russian interests.
Bruce said that under the Institute War & Strikes Clauses (the IWSC) it was likely that the perils of war, hostile act, restraint, and detainment had all been triggered since the invasion and subsequent closure of ports. For a claim to occur usually there must be physical loss or damage, but a detainment clause made it clear that after 12 months of restraint there was a deemed constructive total loss. In some cases, the period had been amended to six months, but in most cases, it would be 12 months, expiring next February “when we can expect potentially a large number of deemed total losses all being claimed at the same time. It is understandable that war risks insurers are sensitive about situations where a total loss can be claimed even though the vessel is intact and in theory still a valuable asset.”
For a constructive loss to be declared before that there would have to be the usual test under the Marine Insurance Act of the assured being deprived of the possession of the ship by an insured peril: a difficult test to satisfy, so usually it would be easier to rely on the detainment clause. An addendum known as the blocking and trapping clause, introduced in 1984 following the experiences of ships trapped during the Suez crisis and the Iran/Iraq war, extended “restraint” to apply where waterways are blocked by warlike acts for 12 months.
Bruce outlined the dilemma: “What happens where a policy has been cancelled or has lapsed after the vessel became trapped; then before the 12 months it gets destroyed by a missile or by a mine? The position gets even more difficult if it turns out that other vessels are then able to escape unharmed from the same port before the 12 months, in other words but for the missile strike there would have been no potential loss. That is quite a difficult and interesting question and there is no English reported case which provides the answer on precisely those facts.”
Insurers might say that the cover was not extended, and no premium was being paid at the time of the missile strike, so that was an act which was not covered. On the other hand, it could be argued that the vessel was already doomed when the invasion took place, and at that time the insurers were still on risk.
One case which could be relevant was Scott v Copenhagen Re, which related to a BA aircraft stranded in Kuwait when Saddam Hussain invaded that country. A month after the start of Operation Desert Storm, still within the policy period, the BA aircraft was destroyed by allied bombing. Given that the aircraft was destroyed after commencement of war, the Court of Appeal held that the triggering event for the loss was the start of the war.
Although it seemed clear that cover under the detainment clause would survive if the detainment started before cancellation, it was less clear that there was still cover if the vessel were destroyed after cancellation but before the 12 months from detainment was over. There seemed to be possible support for there being ongoing cover based on Lord Justice Rix’s view in Scott v Copenhagen Re.
Turning to potential complications in relation to the residual value of vessels, Bruce said “We are likely to see some interesting scenarios which have not really been seen before.” There was an unusual situation in that some vessels were worth a lot more than the insured value, meaning that even where the deemed total loss provision were changed to six months, owners might not want to claim for a constructive total loss if they thought they would be able to get the vessel out eventually. It was possible in those cases for the insurers to agree to change the period back to 12 months and this might suit both parties. The problem for insurers was that if they did not exercise the right of taking over ownership, they could lose their right to the residual value. The solution was probably a negotiation with the owner or a third party whereby effectively they sell the vessel back to the owner at a discount or find someone else to buy it.
As to aggregation of claims, “there is an issue as to whether losses will be aggregated as losses arising from one occurrence or event, and there could well be disputes about that, as well as to which reinsurance policy responds. That in turn depends on the date which you take as the date of loss. Aggregation is a big issue because if the losses are all lumped together there is only one excess which applies. That is usually a good thing for the insurer as against reinsurers unless the per-event limit is exceeded.”
Bruce noted that since August, three ports had reopened for grain exports, although agreement with Russia has been under threat. Fischer added that, following the Suez Canal crisis in 1967 the Institute Detainment Clause was introduced, and a detainment clause is now automatically included in the Institute War and Strikes clauses. An arbitration took place in November-December 1981 seen as a test case on how to deal with a vessel trapped in the Shatt-al-Arab, and it was held that shipowners had lost the free use and disposal of their vessel. It was thus reasonable to consider the vessel a constructive total loss after 12 months from notice of abandonment.
The reference to a “closure of the connecting channel” in the London Blocking and Trapping Addendum was slightly problematic, said Fischer. For instance, access to the high seas could be blocked for ships due to the presence of floating mines in the coastal area rather than by a blocked waterway, which is what actually happened in Ukraine.
Fischer said that an underwriter assessing the premium for war risk insurance would have to take into consideration that losses would occur during a period of peace between superpowers, but where a ship was trading in an area with regional conflicts, when a termination clause allowed cancellation with seven days’ notice, although insurance cover might be provided for additional premium.
Why seven days? One would assume that the seven days would provide a ship that had entered the now excepted area with the opportunity not only to leave the war risk area but possibly even finish scheduled cargo operations. Shipowners contemplating sending ships into the war risk area could then decide whether to go ahead despite the increased risk, for which an additional premium would be charged by underwriters. But what about ships that entered before the area was declared excepted, but are detained and unable to leave the area? They were already impacted by the insured peril of detainment.
The question was whether it was justified to impose an additional premium on a vessel after it had been struck by “capture, seizure, arrest, restraint, detainment, confiscation or expropriation” and the assured had therefore lost the free use and disposal of the vessel. “My view is that it is at least problematic for underwriters to charge additional premiums for ships that were detained in Ukrainian ports as from February 24, 2022,” said Fischer.
Suppose that for a detained ship the charterer refuses to pay the additional war premium, and the shipowner is unable or reluctant to do so. This means the war risk insurance would be cancelled, or the agreed policy period run out while the ship was detained and before expiry of the 12 months stipulated by the detainment clause. “Is it a good idea to end an insurance contract at a time when the risk of being detained has already struck, but the claim under the policy has not yet materialised? Because this is what detainment constitutes: a peril with two components, namely an initial strike and a time element. Without these two ingredients a claim under the policy cannot materialise.”
There were similarities between a missing ship and one detained in a war situation, in the sense that both cases might eventually be treated as total loss. The Continuation Clause of the Institute Time Clauses Hulls 1995 provides for a missing ship to be held covered until arrival at the next port in good safety, or until made safe. There are good arguments to suggest that the “held covered” provision also applies if the vessel is finally found to be a total loss. “My view is that it might be a solution to adopt this practice for a war risks policy that contains a detainment clause, namely a provision that a detained vessel be held covered until the time that it is either free to leave or declared a total loss, at a pro rata monthly premium,” concluded Fischer.
16. Zero ready
Lloyd’s Register (LR) has launched a five-level framework for assessing the actual readiness of a vessel for the transition to zero carbon fuels. Published by LR’s Maritime Decarbonisation Hub, ‘Zero Ready Framework – helping to ensure shipping can deliver our zero-emissions future’, ranks vessel readiness for zero carbon fuel operations from 1 (highest level of readiness) to 5 (lowest level of readiness), and measured on a well-to-wake basis.
The framework has been created to offer clarity around the term ‘readiness’ which is used in multiple ways across the shipping industry. The rankings were developed based on observations that some shipowners have had a design for conversion to zero carbon fuel done as a paper exercise, without a plan for how the conversion would be carried out. Others have some or all the required equipment (for example: engine, tank, pipework, fuel management system) already installed. Another group of vessels have a dual fuel engine that could run on a zero-carbon fuel but may require an engine retrofit to do so.
An assessment of a container ship route in Southeast Asia by the LR Maritime Decarbonisation Hub found that, despite the pushing forward of new initiatives by financiers, insurers and ship charterers to achieve zero emissions, 27% to 30% of vessels newly built between 2022 and 2050 will still require conversion to a different fuel in order to meet zero targets.
Charles Haskell, Director, LR Maritime Decarbonisation Hub, said: “As ships built today will still be in service in the 2040s, it’s essential for shipowners to understand the full implications of actual vessel ‘readiness’ for zero carbon fuels to meet the industry’s 2050 decarbonisation targets. These differing standards and classifications of ‘readiness’ across the industry have made it difficult for owners to conduct a transparent assessment of their vessels’ commercial prospects in a zero-emissions future.
“In view of the significant structural and technical complexities of vessel conversion, we developed the ‘Zero Ready Framework’ to help investors, charterers, insurers and prospective shipowners better understand and assess the risks and conversion costs of both existing and newly built fleets.”
“Until now, we have found that current regulations have focused on near-term improvements in vessel energy efficiency and GHG emissions, but have yet to address the longer-term goal of vessel readiness for zero carbon fuels,” said Andrew Keevil, Strategy Development Manager for LR Maritime Decarbonisation Hub and lead author of the framework.“We designed the ‘Zero Ready Framework’ to accommodate the spectrum of vessel capabilities in both the fleet and the order book. We hope that the industry adopts these readiness levels, thus creating a common understanding of where ships are today on the journey to zero. By committing to a clearly defined readiness standard by a specified date, shipowners are better able to factor climate risks into their business plans and demonstrate climate action to both their customers and stakeholders.”
The framework has been developed through cross-industry consultation through a series of workshops with industry stakeholders.
Haris Zografakis, partner at the law firm Stephenson Harwood, who is involved in various maritime decarbonisation projects and is an expert in the contractual aspects of decarbonisation, said: “Many aspects of decarbonisation suffer from an absence of accepted standards and precise definitions; for example, in relation to measurement of emissions, the specifications of new fuels, and their fitness for purpose. Another nebulous area is the commonly used term ‘zero-ready’ vessels (either newbuilds, or following retrofits), which has no classification or regulatory definition.
“Standards and clarity are not merely desirable for debates, policies, technological progress, or investments. They are also critical in the world of contracts: shipbuilding, ship conversion, chartering, but also finance, where uncertainty and ambiguity always gives rise to disputes, for example in relation to pre-contractual misrepresentations, or breach of contractual warranties. LR’s efforts in creating a set of definitions for the various types of ‘zero ready’ vessels is an important development, as it will allow parties to incorporate the relevant definition into their contracts, so as to identify precisely which type of readiness they adopt. A fine example of voluntary initiatives, aided by contracts, moving ahead of regulations.”
Notices & Miscellany
DNV has joined forces with industry partners for on-board testing of established drone technologies within the REDHUS project. The final goal is to create a prototype drone inspection.
Drone surveys enable the close inspection of hard to access areas, especially in ship tanks, and reduce the time, risks and costs related to staging, erecting or rafting. The DNV-led project is testing drone technology, developed by Scout Drone Inspection that are capable of navigating in confined spaces, such as cargo tanks. This provides valuable input and requirements from the owner’s perspective for future drone tank surveys.
Watch the video article to learn more about the drone technology and inspection results.
ICS is pleased to announce the release of the updated edition of Cyber Security Workbook for On Board Ship Use, written and developed in collaboration with Witherbys and BIMCO. Order your copy of this essential publication directly with Witherbys. This guide is available in both print and ebook versions.
Cyber risk management should be an inherent part of safety and security and should be considered at all levels of the company, including senior management ashore and on board personnel. Cyber Security Workbook for On Board Ship Use provides practical guidance for ship and shore and is aligned with IMO Resolution MSC.428(98). This new edition contains updated information on current threats and includes new sections on topics such as cargo management and passenger ships. Detailed case studies have been added to illustrate important examples of cyber risks.
View the full contents list of what’s included in the Cyber Security Workbook for On Board Ship Use, Fourth Edition and order directly from Witherbys. This guide is priced at £250.
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Things You Don’t Want to Overhear Over an Airline P.A. System
1. Ocean crossing flight: This is your Captain speaking, I just wanted to take this time to remind you that your seat cushions can be used as floatation devices.
2. Hey folks, we’re going to play a little game of geography trivia. If you can recognize where we are, tell your flight attendant and receive an extra pack of peanuts.
3. Our loss of altitude allows a unique close up perspective of the local terrain. I assure you that it’s all part of our airline’s new commitment to make your flight a sightseeing extravaganza.
6. (As the plane turns around right after takeoff)….uhhhhh….we have to go back …. we ..we ….uhhhhhh ….forgot something…..
7. I’m sure everyone noticed the loss of an engine, however the reduction in weight and drag will mean we’ll be flying much more efficiently now. (ironic note: this is actually true for prop aircraft!)
8. Fasten your seat belt. (Same tone your friend with the suicidal driving tendencies uses when you get in the car)
9. This is your Captain speaking….these stupid planes are a lot different than the ships I’m used to.. so you’ll have to give me some leeway…
10. It would be a good idea if right now everyone closed their shades and watched the in-flight movie.
11. We’ve now reached our cruising altitude of 20,000 feet and … Oh
12. Don’t worry! That one is always on E…
13. Get the parachutes ready…
14. Drinks are on me…or I’ll have what the Captain’s having…
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