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					“TANKER SEMINAR”

      Madrid
   19 May 2010


   Peter M Swift,
   MD INTERTANKO
                Tanker Seminar


•   INTERTANKO
•   Tanker Shipping’s Record
•   Key issues
•   GHG Emission Reductions
•   Piracy
•   Other commercial/operational issues
•   Markets and more
•   Incident data
               INTERTANKO Today

  260 + members operating ca. 3,100 ships
> 75% of the independent oil tanker fleet and > 85% of
               the chemical carrier fleet
           300 + associate members:
    in oil and chemical tanker related businesses

      15 Committees – 5 Regional Panels
      Principal Offices – London and Oslo
 Representative Offices in US, Asia and Brussels
Observer Status at IMO, IOPC, OECD and UNCTAD

 International Association of Independent Tanker Owners
    INTERTANKO’s Strategic Objectives

To develop and promote best practices in all sectors
  of the tanker industry, with owners and operators
  setting the example.
To be a positive and proactive influence with key
  stakeholders, developing policies and positions,
  harmonising a united industry voice, and engaging
  with policy and decision makers.
To profile and promote the tanker industry,
  communicating its role, strategic importance and social
  value.
To provide key services to Members, with customised
  advice, assistance and access to information, and
  enabling contact and communication between
  Members and with other stakeholders.
Global dependence on oil tanker
         transportation




              World Oil Consumption
              3.8 billion ts

              Transported by sea
              2.4 billion ts

              > 60% transported by
              sea
          Tanker Incidents and accidental pollution

    Number incidents
        1050                                                 600

                                          Misc/Unknown
                                          Fire/Expl
         840                              Hull & Machinery   480
                                          Grounded
                                          Coll/Contact
                                          Oil pollution
         630                                                 360




         420                                                 240




         210                                                 120




           0                                                 0
               78
               79
               80
               81
               82
               83
               84
               85
               86
               87
               88
               89
               90
               91
               92
               93
               94
               95
               96
               97
               98
               99
               00
               01
               02
               03
               04
               05
               06
               07
               08
               09
Based on data from LMIU, ITOPF + others
       Accidental oil pollution from tankers
    1000 ts spilt                     1000 bn tonne miles trade
    3,500                                                        105



    2,800                                                        84



    2,100                                        1000 ts spilt   63
                                                  '000 bn
                                                 tonne-miles
    1,400                                                        42



      700                                                        21
                            - 63%     -3%          -83%

        0                                                        0
              1970s        1980s    1990s        2000s


Based on ITOPF/Fearnleys
                  Oil price and freight rate
                     – real and nominal
 USD per barrel

100


                                          Nominal price Arab Light

 80                                       Real price Arab Light
                                          Nominal freight rate AG-West
                                          Real freight rate AG-West



 60
                          Deflated by the Consumer Price Index (USD)
                          CPI* index 1982-84=100


 40



 20



  0
      1970
      1971
      1972
      1973
      1974
      1975
      1976
      1977
      1978
      1979
      1980
      1981
      1982
      1983
      1984
      1985
      1986
      1987
      1988
      1989
      1990
      1991
      1992
      1993
      1994
      1995
      1996
      1997
      1998
      1999
      2000
      2001
      2002
      2003
      2004
      2005
      2006
      2007
      2008
      2009
Tanker Shipping’s GREEN
       Credentials


  • This car, weighing one tonne, uses
    1 litre of fuel to move 20 kms




  • This oil tanker uses 1 litre of fuel to
    move one tonne of cargo 2,500 kms
     – more than twice as far as 20 years ago
             Investment in New Tonnage
                       - Move to Double Hulls

              • More than USD 500 billion invested since
                2000 with the result that ~95% of tanker
                fleet* double hulled by end 2010
                     * over 10,000 dwt
100                                                                                           4
                                                                                     9
                                                                            16
                                                                   22
                                        33       32       27
80                             41                                                                      % dwt share:
                     49

60           78                                                                                           SH/DB/DS
      94
                                                                                              96          DH
                                                                                     91
40                                                                          84
                                                                   78
                                        67       68       73
                               59
                     51
20
             22
      6
 0
                      End 02

                               End 03

                                        End 04

                                                 End 05

                                                          End 06

                                                                   End 07

                                                                            End 08

                                                                                     End 09

                                                                                              End 10
      1991

              1997
                       Average age of tanker fleet above
                                 10,000 dwt
     Average Age - Years
    16



    14



    12



    10



     8



     6
         1970

                1973

                       1976

                              1979

                                     1982

                                            1985

                                                   1988

                                                          1991

                                                                 1994

                                                                        1997

                                                                               2000

                                                                                      2003

                                                                                             2006

                                                                                                    2009
Based on LRFairplay
Tanker Industry is accustomed to
   being under the spotlight
              Watched by:
              • Regulators
              • Politicians
              • Public
              Licences to trade rigorously
                applied by:
              • Flag states
              • Classification Societies
              • Insurers
              • Charterers
              Monitored by:
              • Coastal and Port states
       Key Issues for Tanker Owners
                   Today


• Establishing and maintaining an international
  framework of consistent regulations and
  standards

• Delivering best environmental performance

• Ensuring availability of good people (and quality
  ships)

• Ensuring the welfare and well-being of ships’
  crews

• Meeting the challenges of Piracy
  Establishing an international framework
  of consistent regulations and standards

Shipowners supporting:
• International rather than unilateral legislation
• Ratification of IMO (and ILO) Conventions
• IMO Member State Audit scheme (Flag & Coastal
  States)
• Harmonisation and uniformity across Port State
  Control regimes
• Development and Application of Common Structural
  Rules for Tankers
• Classification societies’ procedural requirements,
  unified requirements and unified interpretations
• Greater uniformity in chartering practices and
  standards
         Delivering best environmental
                  performance

• Air emissions
     - Green House Gases
     - Exhaust Gas emissions (Annex VI & its revisions)
     - VOC emissions
•   Spill Prevention and Response Planning
•   Ballast Water management
•   Biofouling
•   Antifouling systems
•   Ship Recycling
•   Port Reception Facilities (adequacy & affordability)
•   Waste management (onboard and ashore)
•   Radiated Noise pollution
•   Cetacean strikes
       Ensuring availability of good people
       - recruitment, training and retention

                 Both a quantity and quality challenge !

    Recruitment initiatives covering:
    • Raising awareness of the industry:
      - www.maritimefoundation.com and Careers outreach
     programme
     - www.shippingfacts.com
     - www.careers-at-sea.org and DVD: Careers in International
     Shipping
     - www.bimco.org/Corporate%20Area/Seascapes.aspx

    • Attracting entrants to the Maritime Professions
     (IMO: “Go to Sea” and other industry campaigns)

Human Resources are respected as an asset, not treated as a cost !
The Maritime Industry Knowledge Centre
 www.maritimeindustryfoundation.com



                         OBJECTIVES

                         To improve the image of
                         shipping


                         To heighten awareness of
                         international shipping


                         To attract young people
                         both to the seafaring
                         professions and to
                         careers onshore
       Ensuring availability of good people
       - recruitment, training and retention

     Both a quantity and quality challenge !
Training and retention initiatives covering:

• Provision of Cadet berths and training facilities on ALL
  new ships and maximum utilisation of cadet berths on
  existing ships
• Revision of STCW Convention
• Development of Tanker Officer Training Standards
  (TOTS), covering proficiency and experience, as the industry
  standard

• Establishment of Seafarer Focus Groups to provide
  feedback of experiences
 Ensuring welfare and well-being
         of ships’ crews
Initiatives covering:
• Unjustified criminalisation
• Support for IMO-ILO guidelines on Fair Treatment of
   Seafarers (in event of Maritime Accident)
• Improved conditions for shore leave and access
• Reduction in number of inspections
• Less bureaucracy and associated paperwork
• Guidelines for safe handling of cargoes and fuels,
   tank cleaning and entry
• Greater clarity in Operating Manuals
• Guidelines on implementing ILO Convention on
   “work and rest hours”
• Higher standards of accommodation as industry
   “norms” (including e.g. access to internet, etc.)
             Other current
       commercial/operational issues

• Mercury in crudes
• Chinese Marine Pollution Regulations
• Sanctions on oil products to Iran
• Model clauses – Piracy, Vetting, Virtual arrival
• Facilitation payments
• “Smart vetting” – multiplicity of inspections
• Conditions of Class project

• Reaction in the USA to Deepwater Horizon spill
   Greenhouse Gas & Low Sulphur
            Emissions


• Key Dates

• Outcome of COP15
• IMO (MEPC) Programme
• “Virtual Arrival”
• Industry study/TEEMP/Other


Low Sulphur Fuel Issues
             Shipping’s GHG Emissions

Selected Key Dates

12/2009         UNFCCC COP15 Meeting, Copenhagen
3/2010          IMO MEPC 60

3-9/2010        Industry Study Group
5-6/2010        UNFCCC, Bonn
5 to 8 /2010    IMO MBM-Expert Group
6-7/2010        IMO MEPC Intersessional

9-10/2010       IMO MEPC 61
10-11/2010      UNFCCC COP16 Meeting, Cancun

7/2011          IMO MEPC 62
12/2011         EU Deadline for IMO/International Agreement
     IMO/MEPC Challenge remains !


IMO Principle:
“No More Favourable Treatment”

Versus

Kyoto Protocol principle:
“Common But Differentiated Responsibility”
        COP15, Copenhagen 2009


      What was the outcome ?

                  • NO targets
  • NO resolution of Kyoto/IMO Treaty conflict
• NO direct reference to international shipping in
               Copenhagen Accord


              No change yet !
            IMO Programme

To develop:

EEDI for new ships

SEEMP & EEOI for all ships

and, if possible/needed:

Market Based Measure (Instrument) for shipping
          Intersessional Working Group

To improve the text for mandatory requirements of EEDI
  and SEEMP in terms of:
• coverage of ship types and ship sizes for the EEDI;
• establishment of EEDI baseline(s);
• frequency of reducing the mandatory value of EEDI
  (reduction in 3 phases);
• reduction rate from the baseline for the phases for the
  EEDI;
To develop various guidelines:
• on the method of calculation of EEDI;
• for the calculation of baselines for attained EEDI;
• to support the regulatory framework for verification of the
  EEDI
                  MBM – Expert Group

Group of MBM schemes which would require all ships to pay a
    contribution:
1. International Fund for Greenhouse Gas emissions from ships –
    suggested by Denmark and supported and complemented by
    some other Administrations such as Cyprus, Marshall Islands and
    Nigeria.
2. Global Emission Trading System for International Shipping, as
    proposed by Norway, France and Germany; and a Global
    Emissions Trading System for GHG Emissions from International
    Shipping, as proposed by UK.

Group of MBM schemes which provide rewards to more energy
   efficient ships:
3. Leveraged Incentive Scheme based on the International GHG Fund
   - proposed by Japan.
4. Trading with Efficiency Credits based on Efficiency Standards for
   All Ships - proposed by the USA.
5. Vessel Efficiency System - proposed by the World Shipping
   Council.
              Virtual Arrival
       OCIMF /INTERTANKO project

Virtual Arrival is all about managing time and
managing speed.

It’s not about blanket speed reduction to match
current market conditions.

Virtual arrival is about identifying delays at
discharging ports, then managing the vessel’s
arrival time at that port/terminal through well
managed passage speed, resulting in reduced
emissions but not reducing capacity.
                 Virtual Arrival - Summary

• Cooperation between Charterer (Terminal Operator) and Owner
• Speed is “optimised” when ship’s estimated arrival is before the
  terminal is ready
• Owners and Charterers agree a speed adjustment
• May use an independent 3rd party to calculate / audit adjustment
• Owners retain demurrage, while fuel savings and any carbon credits
  are split between parties

Next Steps:
• OCIMF-INTERTANKO running joint workshops
• Charter Parties being reviewed (INTERTANKO/BIMCO/BP/Chevron) –
  indemnity and liability issues, including bills of lading
• Individual oil majors and owners “trialling” system
• Bulk carrier sector examining feasibility
          GHG emissions - OTHER


TEEMP – Tanker Energy Efficiency
  Management Plan

Industry Study – RT, OCIMF, WSC:
  Achievable targets ?

Cooperation with others – e.g. Carbon
  War Room ?
                 Industry Study Group:
              Possible Abatement Measures

•   Gas fuelled engines           •   Solar panels
•   Electronic engine control     •   Trim/draft optimising
•   Waste heat recovery           •   Weather routing
•   Air cavity lubrication        •   Voyage execution
•   Contra-rotating propeller     •   Steam plant operational
•   Fuels cells as auxiliary          improvements
    engines                       •   Speed reduction due to port
•   Frequency converters              efficiency
•   Exhaust gas boilers on        •   Propeller condition
    auxiliary engines             •   Speed reduction due to fleet
•   Energy efficient light            increase
    systems                       •   Hull condition
•   Wing generator                •   Propulsion efficiency devices
•   Wind power – kite             •   Cold ironing
•   Wind power – fixed sails or   •   Engine monitoring
    wings                         •   Reduced auxiliary power
•   Solar panels                      usage
            Low Sulphur Fuel Issues

       • EU Sulphur Directive
         - 0.1% at berth requirement
         - Revision timetable
         - Finnish concerns & Annex VI Revision

       • CARB requirements – legal challenge

       • North American ECA

Regulation without recognition of the impact on seafarers
Greater consideration of the ramifications of new regulations
and legislation at IMO and elsewhere/
Somebody has to make it work - or carry the can if it doesn’t !
            Meeting the challenges of Piracy

       A problem in many regions, including South China Sea,
Somali Basin and Gulf of Aden, Gulf of Guinea and South America !

                                              Best Management Practices
                                           to Deter Piracy in the Gulf of Aden
                                              and off the Coast of Somalia
                                                       (Version 2 - August 2009)


                                          In an effort to counter piracy in the Gulf of Aden and off the

Gulf of Aden / Somali Basin                 Coast of Somalia, these best management practices are
                                               supported by the following international industry
                                                                representatives:-
 Guidance:
                                         1. International Association of Independent Tanker Owners
• Register Company and Ship with             (INTERTANKO)
                                         2. International Chamber of Shipping (ICS)
                                         3. Oil Companies International Marine Forum (OCIMF)
  MSCHOA                                 4. Baltic and International Maritime Council (BIMCO)
                                         5. Society of International Gas Tanker and Terminal Operators (SIGTTO)

• Plan for Transit                       6. International Association of Dry Cargo Ship Owners (INTERCARGO)
                                         7. International Group of Protection and Indemnity Clubs (IGP&I)
                                         8. Cruise Lines International Association (CLIA)

• Following Best Management
                                         9. International Union of Marine Insurers (IUMI)
                                         10. Joint War Committee (JWC) & Joint Hull Committee (JHC)
                                         11. International Maritime Bureau (IMB)

  Practices (V2)                         12 International Transport Workers Federation (ITF)



• Report regularly to UKMTO Dubai (or    These best management practices are also supported by:-

                                              1) Maritime Security Centre Horn of Africa (MSCHOA)
  MARLO)                                      2) UK Maritime Trade Organisation (UKMTO Dubai)
                                              3) Maritime Liaison Office (MARLO)
            Piracy: Development update

• Industry involvement via UN Contact Group/SHADE/IMO-MSC
• Encouraging continuing Naval support but also a new strategy
  for Western Indian Ocean

• Issues on under active discussion:
  - push for prosecutions – gathering/providing evidence
  - impact of US “Ban” on Ransom Payments
  - increasing calls for the Arming of Ships

• Industry developing:
    Best Management Practices – Version 3
    Guidance to companies, masters & crews on:
    - “Capture to Release”
     - the care of seafarers & others who have been hijacked

• New focus on the Gulf of Guinea / Malacca Straits
  Markets and More !
Tanker Markets Today ?




• Demand down, but recovering ?
• Supply up, and still growing ?
• Rates down, and ?
        Markets and more




• Demand : World oil trade

• Supply : Ships on Order & Fleet development

• Tanker market

• Shipbuilding capacity
                                                           % change (year on year)




                                                                               1
                                                                                       2
                                                                                           3
                                                                                               4
                                                                                                   5
                                                                                                       6




                                                                0




                                            -4
                                                 -3
                                                      -2
                                                           -1
                                     1981
                                     1982
                                     1983
                                     1984
                                     1985
                                     1986
                                     1987
                                     1988
                                     1989
                                     1990
                                     1991




Source: Clarksons (September 2009)
                                     1992
                                     1993
                                     1994
                                     1995
                                     1996
                                     1997
                                     1998
                                     1999
                                     2000
                                     2001
                                     2002
                                     2003
                                     2004
                                     2005
                                     2006
                                                                                                           World Oil Demand vs. GDP




                                     2007
                                     2008
                                     2009
                                     2010
                                                                             IMF GDP

                                                                Oil Demand
                    Orderbook Development
                        (All ship types)


        Orderbook – All ships (>999GT)




Source: Clarksons, April 2010
                                                Orderbook by ship type
                                                         (as % existing fleet)




                         70

                         60                                          64
percentage of capacity




                         50

                         40
                                                                                      41
                         30
                                   33               33
                         20

                         10                                                                          15
                          0
                                 Tanker          Chemical        Bulk carrier    Container ship   LPG carrier



                         Source: Clarksons (September 2009)
                                               Tanker Contracting 1996-2010

                     90

                     80
                                                                                                                                    Handy

                     70
                                                                                                                                    MR
                     60
million deadweight




                     50                                                                                                             Panamax

                     40
                                                                                                                                    Aframax
                     30

                                                                                                                                    Suezmax
                     20

                     10
                                                                                                                                    VLCC

                      0




                                                                                                                      2009
                                                                                                        2007

                                                                                                               2008
                                                              2001


                                                                     2002

                                                                            2003


                                                                                   2004

                                                                                          2005


                                                                                                 2006




                                                                                                                             2010
                                                       2000
                          1996


                                 1997


                                        1998

                                                1999




                                 Source: Clarksons, April 2010
                                              Fleet Growth



                                       2000-2009    2009   2010     2011
                     20

                     15
    % change y-o-y




                     10

                      5

                      0

                     -5
                            VLCC       Smax        Amax      Pmax          MR   Handy


*Includes slippage, cancellation and removal ideas
                          Source: Clarksons, April 2010
                                                         Tanker Fleet Development


                       550
                       500
                       450
deadweight (million)




                       400                                                                                                                                                             10-24 tanker
                       350                                                                                                                                                             handy
                                                                                                                                                                                       MR
                       300
                                                                                                                                                                                       Panamax
                       250                                                                                                                                                             Aframax
                       200                                                                                                                                                             Suezmax
                                                                                                                                                                                       VLCC
                       150
                       100
                       50
                        0


                                                                                                                               1998
                                                                                                                                      2000
                                                                              1984
                                                                                     1986
                                                                                            1988
                                                                                                   1990
                                                                                                          1992
                                                                                                                 1994
                                                                                                                        1996




                                                                                                                                             2002




                                                                                                                                                                                2012
                                                                       1982
                             1970
                                    1972
                                           1974
                                                  1976
                                                         1978
                                                                1980




                                                                                                                                                    2004
                                                                                                                                                           2006
                                                                                                                                                                  2008
                                                                                                                                                                         2010
                        Source: Clarksons (September 2009)
                                                       $ million




                                                                   120
                                                                         150
                                                                               180




                                             30
                                                  60
                                                          90




                                         0
                                Jan-76

                                Jan-78
                                                                                     VLCC


                                Jan-80

                                Jan-82

                                Jan-84

                                Jan-86
                                                                                     Suezmax




                                Jan-88

                                Jan-90




Source: Clarksons, April 2010
                                Jan-92

                                Jan-94
                                                                                     Aframax




                                Jan-96

                                Jan-98

                                Jan-00
                                                                                     Panamax




                                Jan-02

                                Jan-04

                                Jan-06
                                                                                                  Newbuilding Tanker Prices




                                Jan-08

                                Jan-10
                                                                                     MR Product
                                                                  no of vessels




                                                       100
                                                                      200
                                                                                      300
                                                                                                 400
                                                                                                         500




                                            0
                                1970-1974
                                1975-1979
                                     1980
                                     1981
                                     1982
                                     1983
                                     1984
                                     1985
                                     1986
                                     1987
                                     1988
                                     1989
                                     1990
                                     1991
                                     1992
                                     1993
                                     1994
                                     1995




Source: Clarksons, April 2010
                                     1996
                                     1997
                                     1998
                                     1999
                                     2000
                                     2001
                                     2002
                                     2003
                                     2004
                                     2005
                                                                                                               Tanker Age Profile




                                     2006
                                     2007
                                     2008
                                     2009
                                     2010
                                     2011
                                     2012
                                     2013
                                     2014
                                                                                            MR




                                                VLCC
                                                                                                 Handy




                                                                  Aframax

                                                        Suezmax
                                                                            Panamax
                                                    Tanker Fleet Comparisons



                                           non-double hull                  On Order                 Built since 2000

                                80
                                70                                                          73            75
percentage of exisiting fleet




                                               68             69            69
                                60
                                                                                                                          58
                                50
                                40
                                          38
                                30                       33
                                                                                                     29
                                20
                                                                       20              21                       19
                                10   12                                                                              13
                                                     6             5               9             6
                                 0
                                      VLCC          Suezmax        Aframax        Panamax            MR           Handy
                                      Source: Clarksons, April 2010
                                   Where next for Single Hull Tankers ?
                                         Current trading status


                         100%
                         90%
                                                                                            Storage%
                         80%
% of single hull fleet




                         70%
                                                                                            Inactive%
                         60%
                         50%
                         40%                                                                Domestic
                                                                                            Trading%
                         30%
                         20%                                                                Normal
                         10%                                                                Trading%

                          0%
                                 VLCC   Suezmax Aframax Panamax   MR    Handy    Total
                                                                                 Fleet




                                Source: Clarksons, April 2010 (datasource: Clarksons/LLI)
          Where next for Single Hull Tankers ?
                Trading beyond 2010 ?

              Flag/Port State positions re MARPOL 13G
                   trading up to the age of 25 years

Australia       No            Bahamas                  Yes
China           No            Barbados                 Yes
EU              No            Liberia                  Yes
Mexico          No
                              Marshall Isl.            Yes
Romania         No
S Korea         No*           Panama Flag              Yes
Philippines     No*           Japan                    Yes
UAE             No*           Singapore                Yes
(*No official note
                              India                    Yes
sent to IMO yet)              Hong Kong                Yes**
United States N/A             (** Max. 20 years old)
(OPA90)
                Tanker sales for demolition
                  and VLCC freight rate
   m dwt                                                                               USD / day
    30                                                                                   100,000
                       VLCCs sales for demolition
                       <200,000 dwt sales for demolition**

    24                 VLCC freight rate***                                              80,000


    18                                                                                   60,000


    12                                                                                   40,000


     6                                                                                   20,000


     0                                                                                   0
         85 86 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09*
                                         * Until week ending 4 September
Source: INTERTANKO                       ** Sales for demolition until 4 September
                                         *** Clarkson Freight rate AG-Japan week ending 4 September
                 Average tanker freight rates
                        (based on Baltic Exchange rates)
   USD/day
      100,000
                                                     VLCC AG-Japan, 250,000 ts
       90,000                                        Suezmax Wafr-US 130,000 ts
                                                     Aframax N Sea-UKCont, 80,000 ts
       80,000                                        Product Caribs-US, 38,000 ts


       70,000

       60,000

       50,000

       40,000

       30,000

       20,000

       10,000

            0
                 2001     2002       2003   2004   2005       2006          2007       2008   8m09



Source: Baltic Exchange/INTERTANKO
Market Forecast   !




        or
      Lower Freight Rates & Fleet
              surpluses



Implications ?

• Challenge to maintain quality and standards, -
  e.g. maintenance, training

• Challenge to meet the issues of the day – e.g.
  including environmental challenges



 Potentially made even worse if new ships are of
                  low standard ?
 Shipbuilding capacity




• A future unknown factor !
              Shipbuilding output and forecast
   m cgt
  70


               Available capacity                     9
  60
               Orderbook                             14%     26
               Historical deliveries                        38%
  50


  40                                                                48
                                              26
                                                                   76%     62     67
                                                                          95%    99%
  30
                                                      55

  20                                                        42
                                       38
                    31       33
         26                                   26
  10
                                                                   15

                                                                           3      0
   0
        2005      2006      2007       2008   2009   2010   2011   2012   2013   2014

Source: Worldyards/INTERTANKO Aug 09
                 Shipbuilding output potential
   m cgt
  70
           Availability small
  60       Availability big
           Orderbook small
  50       Orderbook big
           Deliveries small
  40       Deliveries big

  30


  20

  10


   0
        2005      2006        2007   2008   2009   2010   2011     2012    2013     2014


                                                   Worldwide estimates in m cgt
                                                   - small and big ships (Aug 09)
Source: Worldyards/INTERTANKO Aug 09
   Shipyard output potential - surplus

Implications ?

• Distressed sales / lower prices

• Quality and standards maintained or weakened

• Pressure on suppliers and sub-contractors

• Greater customer focus & customisation

• and any government interventions ?
      Incident data




• Learning from feedback and analysis

• Sharing information
               Tanker Incidents and accidental
                          pollution
    Number incidents
        1050                                                 600

                                          Misc/Unknown
                                          Fire/Expl
         840                              Hull & Machinery   480
                                          Grounded
                                          Coll/Contact
                                          Oil pollution
         630                                                 360




         420                                                 240




         210                                                 120




           0                                                 0
               78
               79
               80
               81
               82
               83
               84
               85
               86
               87
               88
               89
               90
               91
               92
               93
               94
               95
               96
               97
               98
               99
               00
               01
               02
               03
               04
               05
               06
               07
               08
               09
Based on data from LMIU, ITOPF + others
                        Sharing Information –
                       Tanker incidents in 2009


                                          Collision
                                        contact 26%



                     Misc, 17%                             Groundings
                                                              22%




                                      Hull &
                                    Machinery
                                       28%                          Fire &
                                   82 incidents                 explosions, 7%
                                    53 engine
                                     related




               Collision/contact   Grounding   Fire/Explosion    Hull & machinery   Misc/unknown




Based on data from LMIU + others
            Tanker hull & machinery incidents

              Number of MACHINERY incidents
                                                              Average
     Year     <10 years   10-24 years >25 years       Total       age
    2002              4           15              3     22       17.5
    2003              3            8              3     14       18.4
    2004              2            7              2     11       18.8
    2005              9           20              5     34       17.6
    2006             12           17              3     32       14.3
    2007             20           25              3     48       13.2
    2008             25           24          10        59       15.6
    2009             18           22          13        53       16.7
    Total            93          138          42       273       15.6




Based on data from LMIU, ITOPF + others
           Muchas gracias / Thank you
        For more information, please visit:
               www.intertanko.com
            www.poseidonchallenge.com
              www.shippingfacts.com
            www.maritimefoundation.com

London, Oslo. Washington, Singapore and Brussels
                        Kyoto Protocol

• Established under UN Framework Convention on Climate
  Change (UNFCCC) and adopted in 1997
• Ratified by 181 countries – not the USA
• Categorises Annex 1 (Developed) Countries and Non-
  Annex 1 (Developing) Countries
• Annex 1 Countries are committed to make GHG reductions
  with set targets, but also flexible mechanisms
• Runs through to 2012, with Conference of Parties (COP15)
  to meet in Copenhagen in Dec 2009 to develop successor
• Kyoto recognises “common but differentiated
  responsibilities”, i.e. developed countries produce more
  GHGs and should be “responsible” for reductions
• Kyoto looks to IMO to address Shipping and ICAO to
  address Aviation, and as such these emissions are
  currently excluded from Kyoto targets
                 IMO Principles for MBMs

1.   Effective in contributing to the reduction of total global
     GHG emissions
2.   Binding & equally applicable to all flag States
3.   Cost-effective
4.   Able to limit or effectively minimize competitive
     distortion
5.   Based on sustainable environmental development
     without penalizing global trade and growth
6.   Based on a goal-based approach and not prescribe
     specific methods
7.   Supportive of promoting and facilitating technical
     innovation and R&D in the entire shipping sector
8.   Accommodating to leading technologies in the field of
     energy efficiency
9.   Practical, transparent, fraud free and easy to
     administer
Industry Study
                       Virtual Arrival
                - a way to reduce emissions

Background

• Potential emission reduction for existing shipping said to be
  up to 15% (at no cost?)
• Fuel represents 60-80% of operation/running costs for owners
• What drives/restricts emission reduction?
• It is recognised that commercial and practical restrictions
  sometimes apply
• Virtual Arrival is a project that involves several stakeholders
• Virtual Arrival implies co-operation and removing
  commercial restrictions
                              Virtual Arrival
                       - a way to reduce emissions
by taking advantage of known inefficiencies in the supply chain and
reducing speed when the terminal is not ready to discharge the cargo

In addition to directly reduced emissions, other benefits are:
• Reduced congestion and emissions in the port area
• Improved safety
• Reduced use of fuels
• Potentially increased use of weather routing

Important pre-conditions:
• The safety of the vessel remains paramount
• The authority of the vessel’s Master remains
  unchanged
• The basic terms of trade remain the same
               What is needed to do to make
                  Virtual Arrival work?


1. A known delay at the discharge port
2. A mutual agreement between two (or more) parties to
   adapt the ship’s arrival time to take advantage of the delay
3. An agreed Charter Party clause that establishes the terms
   for reducing the speed to adapt to the new arrival time
4. An agreement on how to calculate and report the Virtual
   Arrival and the performance of the vessel
5. This may involve a Weather Analysis Provider (WAP)
6. OCIMF/INTERTANKO and class are producing transparent
   standards for verification of WAPs

          But mainly it’s a win–win situation for all,
               based on trust and transparency
 Squeeze on costs = Squeeze on Quality ?




• Challenge to maintain quality
  and standards, - e.g.
  maintenance, training

• Challenge to meet the issues of
  the day – e.g. including
  environmental challenges
      Acting together
        - examples
• Pilotage in international straits as per
  IMO recommendations
• Development of a Marine Electronic
  Highway
• Establishment of a lifeboat user group
  with manufacturers to seek remedies for
  shortcomings
• Campaign to ensure availability of
  safety-related information on the
  characteristics of dangerous cargoes
• Development of Incident Information
  exchanges
• Development of guidelines on tanker
  maintenance and repair procedures

				
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