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Friday, 27 September 2013

Focus on cash control impacts ship operating costs

International accountant and shipping consultant Moore Stephens says total annual operating costs in the shipping industry fell by an average 1.8 per cent in 2012. This compares with the 2.1 per cent average rise in costs recorded for the previous year. There was a significant reduction in costs across all categories and it was clear that ship owners had been focusing on managing costs and conserving cash in 2012.

The findings are set out in OpCost 2013, Moore Stephens’ unique ship operating costs benchmarking tool, which reveals that total operating costs for the three main tonnage sectors covered – bulkers, tankers and container ships – were all down in 2012, the financial year covered by the survey. The bulker index was down by 7 points, or 3.9 per cent, on a year-on-year basis, while the tanker index fell by 5 points, or 3.0 per cent. The container ship index was meanwhile down by 3 index points, or 1.8 per cent. The corresponding figures in last year’s OpCost report showed 3-point increases in both the bulker and tanker indices, and a 5-point increase in the container ship index.

There was a 0.2 per cent overall average fall in 2012 crew costs compared to the 2011 figure. (By way of comparison, the 2008 report revealed a 21 per cent increase in this category.) Tankers overall experienced a fall in crew costs of 2.3 per cent on average, compared to the 2.2 per cent increase recorded in OpCost 2012. Within the tanker sector, Aframaxes reported an overall fall of 5.2 per cent in crew costs, while for operators of Suezmaxes and product tankers the reductions were 4.0 per cent and 3.8 per cent respectively. The only tanker categories to show significant increases in crew costs were 3,000-8,000 cbm LPG carriers and Panamax tankers, where such costs were up by 5.2 per cent and 2.8 per cent respectively.

For bulkers, meanwhile, the overall average fall in crew costs was 0.5 per cent, compared to a 2.8 per cent increase the previous year. The operators of Panamax bulkers paid 3.7 per cent less than in 2011. Handysize bulkers and those in the 10,000-20,000 dwt range, meanwhile, each experienced crew cost reductions of 4.8 per cent. For container ships, the reduced spend on crew averaged 1.0 per cent (as opposed to a 3.4 per cent increase in 2011), although operators of reefer tonnage did pay 3.7 per cent more than in the previous year.

For repairs and maintenance, there was an overall fall in costs of 1.9 per cent, compared to the 1.1 per cent increase recorded for 2011. The only categories of tonnage to show a significant increase here were dry cargo ships of 25,000 dwt and above (5.0 per cent) and 70,000-85,000 cbm LPG carriers (3.2 per cent). The overall fall in repairs and maintenance costs for the bulker sector averaged out at 4.6 per cent, for the tanker sector it was 2.9 per cent, and for container ships it was 2.0 per cent.

Expenditure on stores was down this time by 2.1 per cent overall, having risen by 2.7 per cent in OpCost 2012. The biggest fall in such costs was the 7.7 per cent recorded by bulk carriers in the 10,000-20,000 dwt range. For bulk carriers overall, stores costs fell by an average of 4.5 per cent, while in the tanker and container ship sectors the overall reductions in costs were 2.9 per cent and 1.4 per cent respectively. The most significant increases in stores expenditure was recorded by the operators of 40,000-50,000 dwt chemical tankers (4.5 per cent).

The biggest overall drop in operating costs was the 6.2 per cent recorded in respect of insurance. Only RoRos (5.1 per cent), LPG carriers of between 70,000 and 85,000 cbm (3.0 per cent) and very large container ships (1.4 per cent) actually spent more on insurance in 2012 than in 2011. Reefer operators actually spent 16.4 per cent less, but it was the bulker sector which recorded the biggest reduction in terms of its overall payments to underwriters, averaging out across all tonnage sizes at 8.9 per cent, compared to 7.0 per cent for tankers.

Moore Stephens partner Richard Greiner says: “There is a lot of ‘red ink’ in costs, which actually translates into ‘black ink’ in the bottom line for owners. Significantly, 2012 recorded a year-on-year reduction in operating costs, only the second time this has occurred since OpCost was launched.

“It is no coincidence that, during the operating period covered by OpCost 2013, confidence levels in the shipping industry dropped to their lowest point in the past five years, according to the Moore Stephens Shipping Confidence Survey. So it is unsurprising to find that expenditure declined. The industry generally was under extreme pressure during an extended global economic downturn, and attending to items of manageable cost control was an imperative at a time when revenues were declining.

“That said, however, the 6.2 per cent overall fall in insurance costs across all tonnage types is something of a surprise, given the repeated warnings issued by hull underwriters of the dangers of pitching rates too low. It is perhaps simply the case that declining vessel values are being reflected in declining premium costs.

“The fall in operating costs recorded in OpCost 2013 is good news for owners and operators. So, too, is the fact that the global economic outlook is starting to look brighter. But any optimism should be tempered with caution. Foreseeable – if not entirely quantifiable – costs, not least those related to regulatory compliance, have the potential to make a large hole in the industry’s cashflow over the coming year. So a mix of optimism, forward planning, and ongoing risk management would seem to be a good recipe for the future.”

Bone fide journalists can request an electronic copy of OpCost 2013 by emailing chris@merlinco.com

OpCost, the Moore Stephens vessel operating cost benchmarking report, is now in its 13th year of publication. The 2013 edition is available for the first time online, providing increased reporting functionality for users, wherever they may be. Running cost information is obtained on a confidential basis from clients of Moore Stephens, and from other shipowners and ship managers who submit data for inclusion. OpCost is widely used for benchmarking running costs, the preparation and ongoing monitoring of business plans and in forensic accounting. Copies of the OpCost 2013 report are available free to owners who submit their data for inclusion, or can be purchased by contacting Richard Greiner at Moore Stephens.

Moore Stephens LLP is noted for a number of industry specialisations and is widely acknowledged as a leading shipping and insurance adviser. Moore Stephens LLP is a member firm of Moore Stephens International Limited, one of the world's leading accounting and consulting associations, with 624 offices of independent member firms in over 100 countries, employing 21,224 people and generating revenues in 2012 of $2.3 billion. www.moorestephens.co.uk

For more information:
Richard Greiner
Moore Stephens LLP
Tel: +44 (0)20 7334 9191

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Tuesday, 24 September 2013

Bureau Veritas sharpens ice tools

Leading international classification society Bureau Veritas has responded to demand for safe LNG transportation in the Arctic regions by developing new high-level tools to assess cargo sloshing in ice conditions. It has also developed a cutting-edge probabilistic method for assessing ice loads on structure which will reduce the time and data needed to assess the structure of vessels and units designed for heavy ice operation.

Pierre Besse, Director of Innovation, Bureau Veritas, says, “All eyes are on the Arctic sea routes and on the opening up of the Arctic mineral and energy resources. We have to ensure the vessels and offshore units that operate in those extreme conditions are safe. That is why we have invested heavily in research into ice loads on structure and the effects of cargo sloshing caused by collisions with ice for LNG carriers and oil tankers. That investment gives us powerful tools which we are using to shorten the time needed to assess designs for key Arctic projects and routes.”

A new module for Bureau Veritas’ IceSTAR ice load calculation tool will calculate the kinetic energy imparted to the cargo by a collision with ice. The kinematics derived from IceSTAR can then be used together with CFD analysis to determine how the cargo will slosh and the extra loads this will impose on the ship’s structure and the LNG containment system.

Says Besse, “When gas and oil cargoes begin moving regularly through the Arctic it is certain that ships and ice will interact. The energy from those collisions will cause the cargo to move violently, and we have to make sure the ships and especially LNG containment systems are built to withstand that. It is a complex calculation requiring high level modelling but we can do that, and do it in a commercially acceptable time frame. BV is working on a number of high Arctic projects such as Shtokman and Yamal and these tools will make them safe and ready more quickly.”

 A research collaboration with the State Maritime Technical University of St Petersburg has led to BV upgrading IceSTAR to include the use of probabilistic methods to calculate ice loads. “Ice properties vary widely,” explains Besse. “There are always issues with input data. This research has proven that using stochastic methods we can overcome limitations in the input data to produce safe and robust outputs for the loads which ships and offshore structures may expect from Arctic ice.”
VISIT Bureau Veritas at NEVA, St Petersburg, September 24 - 28. Hall 7 Stand Number R7213

 Bureau Veritas is a world leader in conformity assessment and certification services. Created in 1828, the Group has 59,000 employees in around 1,330 offices and laboratories located in 140 countries. Bureau Veritas helps its clients to improve their performance by offering services and innovative solutions in order to ensure that their assets, products, infrastructure and processes meet standards and regulations in terms of quality, health and safety, environmental protection and social responsibility.
www.bureauveritas.com for corporate information                              www.veristar.com for marine information 

For more information:      

Pierre Besse
Director of Innovation
Bureau Veritas
+33 1 55 24 7465


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Friday, 20 September 2013

Shipping confidence holds firm

Overall confidence levels in the shipping industry held firm over the three-month period to August 2013, maintaining the highest level reached since November 2010, according to the latest Shipping Confidence Survey from international accountant and shipping adviser Moore Stephens. Doubts persist, however, over the level of excess tonnage and the resultant effect on freight rates, while there is growing concern over the increasing cost of regulation.

In August 2013, the average confidence level expressed by respondents in the markets in which they operate was 5.9 on a scale of 1 (low) to 10 (high), identical to the figure recorded in the previous survey in May 2013. This is the highest figure since the 6.0 recorded in November 2010. The survey was launched in May 2008 with a then confidence rating of 6.8.

Charterers’ confidence reached a three-year high, up from 5.5 to 6.3, equalling the all-time survey high for charterers. Confidence was also up for owners, from 5.7 to 5.8, the highest figure since May 2011, and for managers, from 6.0 to 6.2. Confidence on the part of brokers remained unchanged at 5.9. Geographically, confidence was up in both Asia (from 5.8 to 6.1) and Europe (from 5.8 to 5.9), and unchanged in North America at 6.0

Comments from the industry
There was a theme of quietly returning confidence running through the comments of a number of respondents. “There is a feeling of optimism and the sense that we have turned a corner, with supply and demand expected to come into balance,” said one respondent.” Another noted, “The market is waking up, and more opportunities will appear in the near future,” and another still that, “The shipping market is very competitive and constantly evolving, with more and more new players entering the industry as the demand for shipping cargo by sea continues to increase.”

Elsewhere it was noted, “The shipping industry is seemingly moving towards a positive place, albeit slowly,” and, “The shipping market is on the rise, and will continue on that path.” One respondent said, “A shrinking orderbook, combined with the anticipated US and European economic recovery, should help to increase demand in 2014.”

Not everybody was so confident, however, with one respondent going so far as to say, “We have never known a period in shipping where the uncertainty factor has been so high in so many areas.” Another said, “Looking at the moves of some of the major players, we have to ask whether we are all blind or just plain ignorant. The rest of us will be paying for a handful of greedy CEOs who hide behind their number-crunchers who make everything look bright and shiny.”

Another respondent observed, “Some niche markets are showing definite signs of a boom, but others are still in decline. Any overall recovery is still at least another two years away. Managing to survive the last five years is no guarantee that a company will survive the next five.” Elsewhere it was noted that the abiding message must be, “Consolidate, consolidate, consolidate!”

A number of respondents expressed continuing concern about overcapacity. “Our biggest fear,” said one, “is that the financial markets will enter the shipping sector and start ordering new vessels again before moderate growth and scrapping volumes have had time to absorb excess tonnage.” Another said, “We are already worrying about the market from 2016 onwards because too many newbuilding orders are being placed on pure spec.”

One respondent said, “A lot of companies and investment funds seem to have the money and courage to invest again in new orders because they see that building prices have bottomed out. But we already have a serious problem with oversupply in all sectors and all tonnage sizes which will certainly not be solved by the time those new ships now being ordered will be ready to enter service.”

A number of respondents referenced the debilitating effect of overtonnaging on freight rates. “Freight rates need to rise,” said one, “but this will not happen while the supply of ships exceeds demand.” Another emphasised, “Freight rates cannot go up unless more ships are scrapped. Newbuilding should be stopped for a specified period, and the supply of easy cash should be regulated.”

A variety of regulatory issues were meanwhile high on the agenda of a number of respondents. One warned, “Regulatory issues will be coming to a head over the next 18 to 24 months which could require major capital investment to allow shipowners simply to stay in business.” Another emphasised, “Ballast water management requires huge investment which could force a lot of ships into the breakers’ yards,” while another still said, “Current high fuel costs will be significantly compounded by low-sulphur regulatory requirements from 2015 onwards.” One respondent complained, “Rules and regulations are forcibly implemented without consideration for the profit margins of the shipping industry, which affects the fortunes of all parties, including shipbuilders.”

Finance was uppermost in the minds of many respondents. “The shipping banks need to be more active and lend money on secondhand ships at affordable rates,” said one, while another noted, “Finance remains tight for all asset classes.” At the other end of the scale, meanwhile, was the respondent who observed, “We are worried about the huge amount of cash available for newbuildings.” Elsewhere, too, it was noted, “The latest fiasco of newbuilding ordering via IPOs and equity funds is an obstacle on the road to market recovery unless the scrap market can be accelerated to speed up the exit of older tonnage, resulting in demand overtaking supply.”

“High asset values combined with high financing costs will not allow owners to survive for very long unless demand strengthens,” said one respondent, while another expressed “concern about the potential actions of hedge and vulture funds acquiring debt from banks which have exited the market.” But another felt that, “Management of the debt position has been much more measured and calmer than in previous downturns, with less resort to fire-sale tactics, and this may facilitate a return to more normal conditions.”

The role of China in the fortunes of the shipping industry continued to exercise the minds of a number of respondents. “Any significant slowdown in the Chinese economy will have a negative effect on shipping markets,” said one, “although the massive economies of the US and Europe may be coming off lows, so there is potential there.” Another emphasised, “The number of new orders and deliveries in the dry bulk sector will lead to over-supply, and any disturbance in the demand for cargo by China will create a difficult market situation.” Yet another respondent, however, felt that demand for imported bulk cargoes in China was “insatiable.”

The likelihood of respondents making a major investment or significant development over the next 12 months was down marginally on the previous survey, on a scale of 1 to 10, from 5.6 to 5.5, which is still the second-highest figure recorded in the past two and a half years. Charterers were the most confident category of respondent in this regard, up from 6.0 to 6.7, while owners (up one point to 5.8) were also more optimistic this time. Managers, down from 6.0 to 5.8, and brokers, down from 5.2 to 5.1, were of a different mind.

The percentage of charterers who assessed the likelihood of their making an investment at 7.0 out of 10.0 or higher was up by 25 percentage points to 72 per cent, while the number of owners who thought likewise was up by 2 percentage points from 45 per cent to 47 per cent. Meanwhile, the number of managers rating the likelihood of making a new investment over the next 12 months at 7.0 out of 10.0, or higher, was unchanged at 45 per cent.

Geographically, expectation levels of major investments in both Asia and Europe were unchanged at 5.5 and 5.6 respectively, while in North America they were down from 5.9 to 5.0.

One respondent noted, “This is the right time to pick up assets as prices are at low levels, and anyone with funding should opt to buy new fuel-efficient tonnage, at the lowest price levels.” Another said, “In spite of overall difficulties there are niche opportunities to be explored.”

Demand trends, competition and finance costs once again featured as the top three factors cited by respondents overall as those likely to influence performance most significantly over the coming 12 months. The overall numbers for demand trends were up 2 percentage points to 24 per cent, down 1 percentage point for competition at 19 per cent, and unchanged in the case of finance costs at 16 per cent. Tonnage supply (up 1 percentage point to 13 per cent) featured in fourth place, ahead of fuel costs (static at 10 per cent) and operating costs (down 2 percentage points to 9 per cent).

Demand trends remained the number one performance-affecting factor for owners, up by 4 percentage points to 25 per cent. Tonnage supply featured in second place at 15 per cent, down 1 percentage point, followed by finance costs, again down 1 percentage point to 14 per cent. For managers, meanwhile, competition, up 2 percentage points to 20 per cent, featured in first place, with finance costs (also up 2 percentage points, to 18 per cent) overtaking demand trends (down 3 percentage points to 15 per cent) in second place. For charterers, demand trends, up by 9 percentage points to 33 per cent, featured in first place, ahead of competition (up 3 percentage points to 20 per cent), and tonnage supply.

Geographically, demand trends were the most significant factor for respondents in both Asia and Europe (unchanged at 23 per cent in Asia and up by 2 percentage points in Europe to 24 per cent). Competition and finance costs, in that order, made up the top three performance-affecting factors in both Asia and Europe. In North America, meanwhile, demand trends (up by 6 percentage points to 32 per cent) displaced competition (down from 28 per cent to 24 per cent) in first place, with operating costs (up by 2 percentage points to 13 per cent) in third place.

There was a 4 percentage-point increase (from 37 per cent to 41 per cent) in the number of respondents overall who expected finance costs to increase over the next 12 months. The number of respondents expecting finance costs to come down, meanwhile, remained unchanged at its highest figure (11 per cent) since November 2010. Charterers were the only main category to record a fall in the numbers of respondents expecting an increase in finance costs (down from 50 per cent to 38 per cent). The figure for owners was up from 32 per cent to 36 per cent, and for brokers from 38 per cent to 50 per cent, while for managers it was unchanged at 44 per cent.

The number of respondents in Asia anticipating an increase in finance costs rose by 13 percentage points to 53 per cent, the highest figure in this regard since November 2011. At the same time, the number of Asian respondents expecting finance costs to fall (up 5 percentage points to 14 per cent) was the highest for three years. In Europe, there was a 1 percentage-point increase, to 33 per cent, in the numbers anticipating higher finance costs, while the corresponding figure for North America was up by 5 percentage points to 57 per cent. One respondent said, “It is much more difficult now to find a buyer for a ship which is supported by good financial resources.”

Freight rates
Turning to the freight markets, there was an increased expectation of higher rates in all three main tonnage categories covered by the survey. The number of respondents overall who expressed an increased expectation of higher rates in the tanker sector over the next 12 months was up by 1 percentage point to 38 per cent, the same figure as recorded when the survey was launched in May 2008, but still some way short of the survey high of 50 per cent posted in May 2010. Charterers (up 14 percentage points to 43 per cent) led the way in terms of increased expectations of better rates, followed by managers, up 5 percentage points to 36 per cent. The number of managers anticipating lower tanker rates fell 7 percentage points to an all-time survey low of 6 per cent. There was meanwhile a 4 percentage-point drop, to 37 per cent, in owners’ expectations of improved tanker rates.

Geographically, the prospects for increased tanker rates were deemed higher this time by respondents in Asia (up from 31 per cent to 39 per cent) and in North America (up by 19 percentage points to 43 per cent), but lower in Europe (down from 40 per cent to 36 per cent). Respondents in both Asia and Europe recorded all-time survey lows (of 6 per cent and 5 per cent respectively) when asked to predict whether tanker rates would fall over the coming year.

In the dry bulk sector, meanwhile, there was a 2 percentage-point increase, to 42 per cent, in the overall numbers of those anticipating rate increases. Owners (up 9 percentage points to 52 per cent) led the way, followed by managers, up 2 percentage points to 38 per cent. In the case of charterers, however, the expectation of higher dry bulk rates dropped from 48 per cent to 42 per cent, while there was a corresponding fall in brokers’ expectations, by 11 percentage points to 21 per cent.

Expectations of higher dry bulk rates over the next 12 months were up by 9 percentage points in Asia to 42 per cent, and in North America, from 35 per cent to 56 per cent, but down in Europe by 2 percentage points to 42 per cent.

One respondent said, “It looks like a repeat of 2003 for dry bulkers. It is a good time to buy.” Another noted, “We are confident about improvements in the dry market for 2014 and 2015.” Sounding a more cautious note, however, was the respondent who warned, “Since the start of the year we have seen a big increase in new orders for dry bulk tonnage, coupled with an unexpected hiatus in scrapping. Owners seem to have a death wish unless, of course, they are spending other people’s money. The eco argument is not a justification.”

In the container ship market, there was a 4 percentage-point increase, to 30 per cent, in the overall numbers expecting rates to go up. Owners’ expectations were up by 1 percentage point on last time to 27 per cent, while optimism in this regard on the part of brokers rose from 19 per cent to 25 per cent. The expectations of managers held steady at 28 per cent, but those of charterers dropped by 8 percentage points to 30 per cent. Geographically, expectations of improved container ship rates were up by 9 percentage points in Asia to 33 per cent, but down by 2 percentage points in Europe to 27 per cent. Respondents in North America, meanwhile, recorded a surge in expectations of higher container ship rates, from 17 per cent to 35 per cent.

One respondent said, “Container ship tonnage is being overbuilt, and overcapacity is likely to worsen as demand is not increasing sufficiently to compensate. But this provides as many opportunities as it does threats, and our confidence of being able to stay on the right side of the market is not diminished.” Another observed, “Counter-party risks and bankruptcies will affect tonnage demand and supply, and two-tier markets, especially in the German container ship sector, will result in a division between financially sound and restructured and near-insolvent risky KGs.”

Moore Stephens shipping partner, Richard Greiner, says, “It is now a full 12 months since we recorded a decline in shipping confidence. This is a clear indication that shipping is feeling optimistic about its future, as well as more comfortable with the state of the political and economic climate in which it operates.

“The issues giving rise to most concern - overtonnaging, declining freight rates and access to finance - have remained fairly constant throughout the life of the survey. But there are signs of improvement in all areas. Scrapping has increased significantly compared to the levels seen two-to-three years ago, although there is still a long way to go. Similarly, freight rates have started to improve, albeit beginning from the extremely low level to which they had fallen. Currently, for example, 42 per cent of respondents believe that dry cargo rates will pick up over the next year, while 38 per cent anticipate the same for the tanker trades.

“Access to finance, meanwhile, remains tight. There is an old adage about banks being institutions which exist to lend money to those who can prove they do not need it. In the case of shipping this should be amended to banks being institutions which will consider lending money to those who can prove that they have a sound business plan, whether it be in a niche sector or to meet genuine demand in a main market. Moreover, while money for both existing and new ventures is difficult to come by at present, there is no shortage of specialist advice on everything from restructuring and risk management to new ways of financing.

“Meanwhile, it is evident that respondents are becoming increasingly aware of the cost of achieving regulatory compliance. This is not a new concern, since the industry has been aware of the potential costs for some time. Rather, it may be that those operators who have survived the downturn and who are committed to remaining in the market have now started to turn their attention to the cost of doing just that.

“Regulation only ever increases in any industry, and shipping arguably faces a heftier bill than most, given what is coming up. There is, for example, the cost of complying with regulations governing the entry of ships into Emissions Control Areas, which will bite harder and wider in 2014 than previously. Set alongside this, however, the cost of complying with the Ballast Water Management Convention may seem like small beer. The convention will enter into force 12 months after ratification by no fewer than thirty states, representing 35 per cent of the world’s merchant shipping tonnage. Current figures would suggest that it will not be too long before these requirements are met.

“Shipping will have to factor into its cashflows the cost off regulation. There is no alternative, and all interested parties will somehow have to share the cost, in the freight markets and elsewhere. But none of this should deter the industry from moving forward with confidence. There is much to be optimistic about, not least a slowly improving global economic climate, a contraction in over-ambitious expansion absent the necessary collateral, and the continued emergence of new opportunities in the likes of the offshore and renewable energy sectors.

“Over a span of many years, shipping has shown itself to be a diverse, durable and entrepreneurial industry. Unsurprisingly, it is doing so once again.”

The Moore Stephens Shipping Confidence Survey includes responses from key players worldwide in the international shipping industry to a targeted, web-based survey by the Moore Stephens Shipping Industry Group. Responses were received from owners, charterers, brokers, advisers, managers and others. Editors can apply for a copy of the survey by emailing chris@merlinco.com

Moore Stephens LLP is noted for a number of industry specialisations and is widely acknowledged as a leading shipping and insurance adviser. Moore Stephens LLP is a member firm of Moore Stephens International Limited, one of the world's leading accounting and consulting associations, with 624 offices of independent member firms in over 100 countries, employing 21,224 people and generating revenues in 2012 of $2.3 billion. www.moorestephens.com

For more information:
Richard Greiner
Moore Stephens LLP
Tel: +44 (0)20 7334 9191

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Tuesday, 10 September 2013

Young professionals identify challenges to London’s shipping role

A survey by The Shipping Professional Network in London (SPNL) has confirmed London’s pre-eminent position as a global maritime centre. But almost seventy per cent of the young shipping professionals who responded to the survey warned that London faces the risk of declining influence over the next ten years unless specific measures are put in place to address the key challenges to its future development.

The survey, conducted in co-operation with leading accountant and shipping adviser Moore Stephens, canvassed the opinions of young professionals working primarily in the shipowning, shipbroking and management, chartering, advisory and associated industries.

Respondents were provided with a list of key challenges facing London in its attempts to remain a relevant global maritime centre, and asked to choose the three options which they considered to be most important, in order of priority. ‘Competitiveness’ was the leading choice of respondents, followed by ‘taxation’ and ‘the ability to adapt to a fast-changing environment.’

A number of respondents acknowledged London’s traditional strength in the professional services sector relating to the maritime industries, with one emphasising, “The high-value professional services such as finance, insurance, P&I, law and shipbroking underline the prime importance of having a central London office.” Another said, “As long as IMO, the P&I clubs and NGOs are based in London, it will always be a maritime business hub.” Elsewhere it was noted, “London must concentrate on its strengths in the legal, insurance and financial sectors to raise its shipping profile and attract fresh talent,” and, “London is competitive because a huge proportion of global commodity trade is centred there.”

Others, however, saw threats to these traditional strengths. While acknowledging that, “London is a leading service hub and a one-stop-shop for all ancillary shipping services,” one respondent warned, “Unless it comes up with a way to retain more of the highly educated and trained people coming out of British universities, London’s attractiveness will decline.” Another said, “There is only a shipping industry in London because of the use of English law in contracts. But English law has become very expensive and uncertain. Currently there seems to be nothing better, but this is changing, and the legal and shipping professions are not stepping up to the changing times.”

A number of respondents to the survey identified the prohibitive cost of operating in London. “London is a great city, but too expensive,” said one, “and this, together with high labour costs, makes it uncompetitive.” Another noted, “The cost of operating in London is now outweighing the importance of having a London address. Now it is only foreign shipowners setting up in London, and even the oil majors are moving out.” Elsewhere it was noted, “Unless London faces up to the fact that many other centres are competing on costs, it will see progressive erosion of its premier status.”

Respondents were more or less of one mind in identifying London’s biggest competitor over the next ten years as a centre for maritime business - the Far East and, specifically, Singapore. “London has to remain more attractive than Singapore and Asia for brokerage and shipping industry-related services,” said one. Others, meanwhile, felt that this was unlikely, with one commenting, “It is natural that Singapore and Hong Kong will gradually take over from London.” Others still acknowledged that “places like Singapore and Hong Kong are trying to steal the attention,” and, “The best people now are going to Singapore instead of coming to London.”

One respondent suggested, “Work with Singapore, not against it,” while another said, “Companies should partner with Far East organisations so that, if nothing else, London is their European hub.”

UK taxation was cited by a number of respondents as an implicit threat to London’s reputation as a maritime centre. “The UK needs to come up with a more hospitable environment in terms of taxes and regulations in order to attract more shipping companies,” said one. Others advocated “a beneficial tax regime”, “lower tonnage tax”, “an improvement in the tax regime for foreign professionals who are not dependent on public services”, and “changes to corporate taxation.”

Technology was also perceived by a number of respondents as a competitive threat to London. One noted, “There is a need to understand the potential in new technology and its benefit to global trade. Asia understands this and is open to exploiting technological advantages much more than London, where a conservative approach still dominates.”

SPNL chairman Claudio Chistè says, “The survey is a timely reminder of the challenges which London faces over the next ten years if it is to retain its pre-eminent position as a provider of global maritime services. Our members showed a proper understanding of London’s strengths as a maritime centre, combined with a keen sense of what is happening elsewhere. These are people who are working at the coalface, as it were, who are absorbing new technology and new ideas, and who have the prospect of long careers ahead of them. They want London to succeed.

“The survey also showed that, overall, SPNL members are confident that the markets in which they operate will continue to improve over the coming twelve months, after a very difficult period for the shipping industry.”

Richard Greiner, a shipping partner with Moore Stephens in London, says, “The SPNL survey contained a number of constructive observations. Of course, reducing the cost of operating in London is actually outside the control of the maritime industry, and London is by no means the only city in the world where costs are increasing. But there are things which the shipping industry in London can do, and is already doing. The UK operates a very successful tonnage tax regime, for example, which provides participating companies with a low level of tax on shipping activities, the potential to pay no tax when vessels are sold, and predictability on future tax liabilities. The UK also continues to offer significant tax advantages for individuals resident but not domiciled in the UK.

“London should embrace competition, and use it as a platform to expand and improve. The SPNL survey is a welcome addition to the ongoing debate about London’s role as a global centre for maritime services. Recognising the challenge is the first and most important step towards meeting it.”

Claudio Chistè concludes, “London has shown over centuries that it has the mettle and the determination to compete. The SPNL believes that it will continue to do so, provided it can meet the challenges which have been identified.”

The Shipping Professional Network in London (SPNL) is London's foremost networking forum for young shipping professionals. It enjoys significant broad-based support from over one thousand industry companies and individuals, and has official backing from the UK Chamber of Shipping. SPNL supports tomorrow’s young shipping professionals by way of the recently launched prize for the top ICS London-based student, the SPNL Future London project which is under way, educational port visits, and the support of charities. The SPNL continues to recruit new members from various areas of shipping, including shipowners, service providers, lawyers, brokers, insurers, accounting, class, registry and the offshore sector. www.spnl.co.uk

Moore Stephens LLP is noted for a number of industry specialisations and is widely acknowledged as a leading shipping and insurance adviser. Moore Stephens LLP is a member firm of Moore Stephens International Limited, one of the world's leading accounting and consulting associations, with 624 offices of independent member firms in over 100 countries, employing 21,224 people and generating revenues in 2012 of $2.3 billion. www.moorestephens.co.uk

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Monday, 9 September 2013

OSD-IMT secures seismic support vessel contracts for COSL

OSD-IMT, a division of Offshore Ship Designers, has secured a design contract for two IMT 965 seismic support vessels with a bollard pull in excess of 50 tonnes for China Oilfield Services Ltd (COSL), Beijing.

The vessels will be used to provide a range of support activities to larger seismic vessels which operate continuously for months when conducting seismic surveys. Designed to have a multi-role capability in support of the mother ship, they can be used for re-fuelling, fresh water replenishment, the provision of refrigerated stores and dry provisions, the supply of spares and general stores, emergency towing, and escort support and guard duties.

The IMT 965 carries 980 cubic metres of cargo oil for refuelling the mother ship, either alongside or ahead. Fuel is pumped to the mother ship from a deck-mounted fuel supply module located on the working deck of the IMT 965. Up to 500 cubic metres of fresh water can be supplied in a similar way.

Cold stores and dry provisions totalling 80 cubic metres can be accessed directly from the working deck of the IMT 965, providing easy access for transfer to the mother ship, either by the ship’s crane or by a crane mounted on the mother ship.

The operating cycle for the IMT 965 requires it to be on station shadowing the mother ship for prolonged periods. During this time the IMT 965’s activities include keeping passing vessels clear of the streamer arrays, and ensuring that there is a traffic-free area ahead of the mother ship. The vessel is classed with a DP1 notation which will allow it to shadow the mother ship at a pre-set distance for long periods.

The main IMT 965 propulsion arrangement is a hybrid system, comprising twin CP propellers, each driven by a medium-speed diesel engine. A PTO/PTI alternator/motor is connected to each main gearbox, and two 360 kWe diesel generators are also provided. The system is arranged such that one main engine can drive both propellers for maximum fuel economy.

The IMT 965 has accommodation for a total of 48 persons, including cabins for mother ship relief personnel. Its principal dimensions are:

LOA…………………………..64.9 metres
LBP…………………………..58.2 metres
Beam…………………………16 metres
Draught……………………....5.65 metres
Total Deadweight…………..1800 tonnes
Speed ………………………13 knots

Offshore Ship Designers Group (OSD) is a global one-stop resource delivering naval architecture and marine engineering skills to the shipping and offshore energy industries. It draws on an experienced global workforce to provide high quality feasibility studies, conceptual and detailed designs for tugs and offshore support vessels of all types. OSD is based in IJmuiden, The Netherlands, and has offices in Dundee, York, Appledore, Shanghai and Singapore. www.offshoreshipdesigners.com

For more information:
Merijn Brusselers
Offshore Ship Designers
+31 (0)255 54 50 70

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Friday, 6 September 2013

Seacurus wins award for seafarers’ abandonment insurance policy

The policy launched this year by specialist marine insurance intermediary Seacurus Ltd to indemnify seafarers in the event of the financial default of their employers has been recognised as the Broking Initiative of the Year at the Insider Honours 2013 award ceremony.

The award recognises Seacurus’s innovative approach to tackling the long-standing issue of how to safeguard the rights of seafarers in cases of abandonment. In April 2013, Seacurus, part of the Barbican Insurance Group, launched CrewSEACURE, the first product designed exclusively to address the issues and liabilities arising from the stranding of crew members and to satisfy the legal requirements under the new Maritime Labour Convention (MLC) 2006, which has been dubbed ‘the seafarer’s bill of rights.’

The award was launched in 2012 by Insider Publishing Ltd, whose titles include The Insurance Insider. It was presented to Thomas Brown, managing director of Seacurus, at the event, which was held in London. The judges highlighted CrewSEACURE’s ability to ‘provide a lifeline for people wherever they are in the world in the face of extreme financial pressures,’ adding, ‘This product addresses a long-standing global problem and is a watershed moment for the industry’.

Commenting on the award, Brown said, “On behalf of my colleagues at Seacurus, we are delighted and honoured to have been recognised for our efforts to provide a pragmatic and affordable solution to the problem of seafarer abandonment. CrewSEACURE not only offers a lifeline to those crew members who have been set adrift by their ship owners, but also helps to translate the goals of MLC 2006 into tangible benefits for seafarers.”

Seacurus Ltd is an FCA-regulated insurance broker, founded in 2004, specialising in bespoke revenue protection cover for the maritime industry. It is a market leader in the design and implementation of solutions to protect companies from unforecasted balance-sheet impacts, including credit default, charter party cancellations, hijackings and voyage disruptions caused by political events. Seacurus established the first delegated underwriting binding authority for marine kidnap insurance and is an approved Lloyd’s Coverholder.

Formed in 2007, Barbican Group Holdings is an insurance group writing business predominantly through its syndicates at Lloyd’s. It also has a non-Lloyd’s financial solutions business based in Guernsey which offers insurance and reinsurance programmes to the global market. Barbican Syndicates 1955 and 6113 at Lloyd’s has a stamp capacity of £227.5m for the 2013 year of account and underwrites cyber liability, financial and professional lines, healthcare liability, international casualty reinsurance, marine insurance, marine reinsurance, North American casualty reinsurance, property, property reinsurance and corporate, middle market and scheme/affinity group clients in the UK and Ireland. www.barbicaninsurance.com

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Wednesday, 4 September 2013

RINA performs design appraisal for world’s biggest CNG power plant

International classification and verification company RINA Services has performed the design approval for the world's largest Compressed Natural Gas storage plant in Grati, Indonesia. The CNG will feed the local 300 MW power plant.

The plant, operated by Indonesia’s PT PLN (Persero), burns up to 15 million standard cubic feet per day (mmscfd) of gas from the CNG storage, driving three gas turbines. Adding a CNG plant to the existing power station tackles the issue of peak load demand. The CNG storage takes in pipeline gas when the plant is not at full capacity. At peak load, the stored gas reserves boost the plant.

Angelo Lo Nigro, General Manager Energy Solutions, RINA Services, says, “RINA is a world leader in CNG technology approval. It is one of the only classification societies with direct experience of the use of CNG in the maritime field and has developed special rules for its future use. That expertise and experience is valued in the power generation field.”

Using CNG costs per unit of electricity are cut by two-thirds compared to fuel oil power and emissions for this plant are slashed by 254,000 tonnes of CO2 per year, 126.5 tonnes of SO2 per year and 3,500 tonnes of NO2 per year. The CNG system is owned and operated by PT Enviromate Technology International (ETI).

PLN is now extending the use of CNG for power generation by constructing CNG plants at Gresik, Tambak Lorok and Muara Tawar.

RINA has been appointed to provide project management and owner’s engineering services, in addition to the execution of the design review.

"RINA has also been appointed by PT PLN (Persero) for the design of the first marine CNG implementation in the world, to transport gas from Gresik, East Java to Lombok Island in Indonesia. The gas will be utilized to feed a small power plant in order to cope with peak hour electricity demand. The bidding phase for the EPC contract awards is now ongoing," says Lo Nigro.

 To download hi-res pictures of the Grati CNG plant go to http://bit.ly/10HF7rd
or e mail john@merlinco.com

 RINA Services S.p.A. is the RINA Group’s company active in ship classification, testing, inspection and certification services. RINA Group is a multi-national group which delivers verification, certification, conformity assessment, ship classification, environmental enhancement, product testing, site and vendor supervision, training and engineering consultancy across a wide range of industries and services. RINA Group operates through a network of companies covering Marine, Energy, Infrastructures & Real Estate, Transport & Logistics, Food & Agriculture, Environment & Sustainability, Finance & Public Institutions and Business Governance. With a turnover of around 280 million Euros in 2012, over 2,100 employees, and 150 offices in 53 countries worldwide, RINA Group is recognized as an authoritative member of key international organizations and an important contributor to the development of new legislative standards.  www.rina.org         

For more information:

Susanna Gorni
Media Relations
Ph. +39 010 5385555
Email susanna.gorni@rina.org

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