Monday, December 31, 2007

World's largest container line in trouble

Maersk boss says carrier risks losing top spot
Janet Porter, 27 December 2007 Lloyds List

TROUBLED Maersk Line will be toppled from its number one spot without a dramatic improvement in customer service, much lower overheads and a far more careful selection of cargo.

That is the blunt message from chief executive Eivind Kolding as he prepares the next stage of Maersk’s recovery program, to be unveiled next month.

Mr Kolding’s analysis of Maersk Line’s position, set out in three letters to staff circulated early December, reveals an organization in far worse state than any inside and outside the company had realised.

He frankly admits to being “taken aback” by many of the findings, and is demanding a fundamental change in thinking.

Maersk Line “is at a crossroads”, Mr Kolding warned, and will not regain its licence to grow unless the company can be turned round “now”.

The Danish carrier has been ranked the world’s largest container line for many years, helped by two major acquisitions with the takeover of Sea-Land Services in 1999, and then more recently P&O Nedlloyd in 2005. Maersk has also been at the forefront of ship design and development, leading the way with the introduction of super-sized vessels.

But in recent times, two European rivals have been closing the gap on Maersk and could threaten its pre-eminent position.

Over the past five years, Maersk fleet capacity has expanded from just under 790,000 teu to 1.6m teu, according toci-online. At the same time, second-ranked Mediterranean Shipping Co has grown its fleet from 511,000 teu to 1.2m teu and has a larger newbuilding programme than Maersk.

But French line CMA CGM has leapt from number six to third place over the same period, as capacity has shot up from 262,000 teu to more than 700,000 teu, with a further 500,000 teu on order. Mr Kolding has left staff in no doubt about Maersk’s precarious position and the risk of being pushed from the top of the league without radical internal reform.

The competition “will take over the leadership position”, he told the workforce. The list of areas in need of major surgery appears to suggest that Maersk Line’s crisis is far more deep-seated than top management had suggested.

As AP Moller-Maersk’s container shipping division sank deep into the red last year, recently retired group chief executive Jess Søderberg has blamed the situation largely on the introduction of a new but not fully ready IT system at the same time as the integration of P&O Nedlloyd.

Many of the complaints Maersk has faced from customers probably can be traced back to software issues. For example, 20% of all invoices are still incorrect, according to Mr Kolding. This was one of the black holes responsible for the line’s recent run of dreadful financial results.

But under-performance does not end there, with 50% of all shipments more than a day late.

And in a comparison that has attracted much attention in the wider world, Mr Kolding also reckons that, if Maersk had the same cost base as Singapore’s APL, it would have accrued a profit of $5.5bn over the past three years rather than just $2bn.

Possibly driven by the need to fill its huge ships, Maersk has not been securing the best-paying cargo, scolded Mr Kolding, the former AP Moller-Maersk chief financial officer who took over as sole chief executive of Maersk Line earlier in the year as other senior executives were ousted.

Mr Kolding will announce more details of the recovery plan, called StreamLINE, in a few days time, but some changes are already in train.

As Lloyd’s List reported at the beginning of December, Maersk Line will be separated from Maersk Logistics and other container business activities.

Saturday, December 22, 2007

Christmas 2007

Well, another year has rolled by. It only seems like it was last month I was making a similar post.

I would like to wish everyone a Merry Christmas and Good holidays.
For those at sea and away from their families and loved ones, I wish them flat seas and a cook who will put on a magnificent feast for them.

May the year 2008 be prosperous and happy to you all.

Cheers and My Regards to all,


Sunday, December 16, 2007

Canada Ship Owners and regulators - Take notice

This interesting article came across my desk the other day. Its sad to hear of such a disaster hitting Russia, but one wonders if in the aftermath, there isn't an important message for Canada in there. Canada which relies a great deal on much older tonnage than cited in the article (25 years old).

More about this event at the BBC's website, and the CS Monitor.

- Martin

Black Sea storm casualties highlight state of aging Russian river fleet
John McLaughlin, 4 December 2007 Lloyds List

THE sinking of a Russian sea-river tanker along with several other ships during the storm that hit the Black Sea and the Sea of Azov earlier this month will lead to a significant tightening of regulations covering the Russian river fleet, Russian market observers have told Lloyd’s List.

At the same time, industrial realities, notably bulging orderbooks at sea-river shipyards and the need to maintain vital services on the Russian river system, mean that radical change of the sort promised in the immediate aftermath of the storm remains unlikely.

The 29-year-old Volgoneft 139 sank off the port of Kerch during heavy storms on November 11, spilling around 1,200 tonnes of its 4,077-tonne cargo of heavy fuel oil into the Kerch Strait. Early estimates suggest that the oil will take years to disperse and that the clean-up operation will be costly.

In the immediate aftermath of the casualties, Russian authorities banned certain vessels over 25 years of age for sea use and ordered inspections to ensure compliance with the STCW and Solas conventions as well as class rules. Transit permits were also introduced for the Kerch Strait connecting the Black Sea with the Sea of Azov.

Subsequently, Alexander Davidenko, head of river navigation agency RosRechMorFlot, promised a clampdown on older tonnage. “The fleet must be young,” he said. “We will subject shipowners to such conditions that it will become unprofitable to use barges older than 25 years.”

The statement sparked protests from shipping executives, who claimed that it would be the ruin of an industry heavily reliant on older tonnage.

Inquiries into the sinking, and several other casualties — notably the loss of the 1965-built Volnogorsk with the lives of eight crew, and the difficulties experienced by the 32-year old Volgoneft 123 — are understood to have focused in part on the vessels’ age and on the Volgoneft ships’ common classification to M-SP class by the Russian River Registry.

The operation of such vessels at sea is limited to situations where there is a 3% probability of waves running to a height of 3.5 m, but there were reports of 5 m waves during the November storms.

The sources noted that such vessels have lower longitudinal strength than vessels of more modern construction now beginning to move into the Russian river trade, some of which have been classed to the more demanding 11-SP classification by IACS member RMRS.

At the same time, the renewal of the river fleet has moved forward only slowly since the collapse of the Soviet Union, although there has been a marked pick-up in newbuilding investment over the past four years.

The heavily-trafficked Russian river system still relies heavily on large numbers of older tugs, barges and tankers, including several hundred of the Volgoneft-type vessels caught up in the November storm.

Russia’s ability to engineer a speedy overhaul of the fleet appears severely limited, however. Russian sea-river shipyards have little remaining capacity after a surge of orders.

Not only that, but they also face the same difficulties sourcing engines as other segments of the shipbuilding industry.

At the same time, there seems to be little doubt that the Russian authorities will increase scrutiny of the fleet through more thorough and frequent inspections. Regulations on older vessels operating outside the river system may also be significantly tightened.

Industry sources also anticipate other knock-on effects across the Russian river system, including a significant increase in insurance rates for older vessels and an increase in the flight to quality that has been under way among charterers for some time.

That in turn is likely to translate into higher freight rates for still-scarce quality tonnage and further increases in prices at Russia’s in-demand sea-river shipyards.

A good reason to take your time building steam

Norway report blames NCL and BV
Craig Eason, 11 December 2007 Lloyds List

THE official report into the cruiseship Norway explosion in Miami in 2003 that killed eight crew members has said that the owner, Norwegian Cruise Line, and class society Bureau Veritas were partly to blame.

The US National Transportation Safety Board report into the boiler room explosion claims that the probable cause was “the deficient boiler operation, maintenance, and inspection practices of Norwegian Cruise Line, which allowed material deterioration and fatigue cracking to weaken the boiler. Inadequate boiler surveys by Bureau Veritas contributed to the cause of the accident.”

Replying to the report, NCL president and chief executive Colin Veitch said: “As evidenced by the highly technical nature of the discussion and the fact it took four and a half years to complete, this was clearly a unique and unusual accident.

“NCL immediately accepted responsibility and compensated all of the victims. NCL does not concur with all of the conclusions in the report, but we are hopeful that its publication will help close this tragic event.”

The incident on the 43-year-old Norway happened when the starboard aft boiler ruptured shortly after the vessel came alongside in Miami after a seven-day Mediterranean cruise. The boiler contained about 20 tonnes of water, at 275 degrees centigrade under high pressure. When the fracture occurred, the water was released into the normal atmosphere of the engine room, turning to steam as it expanded 1,260 times.

This steam, mixed with smoke, soot and debris, swept through the engineering spaces, killing four crew and a further four in lower accommodation areas. As the steam rose rapidly through the boiler room, it entered other crew accommodation and work areas, injuring 17 more.

Built as the France in 1960, the vessel was originally fitted with eight boilers. Four were removed when the vessel was purchased by NCL in 1979.

During normal steaming in the Caribbean two or three were used during voyages, depending on requirements, while the fourth remained shut down. This process of cycling is what investigators believe contributed to the catastrophe.

The investigation found that engineers did not follow the boiler manufacturer’s instructions for shutting or cooling them down, often opening vents and starting forced air fans to speed the process.

Experts believe excessive cooling down and reheating of boilers too quickly can lead to increased stresses and subsequent fatigue.

The report also identified inadequate levels of hydrazine, a chemical used to reduce oxygen levels in the water. Oxygen causes corrosive pitting which was discovered during the last inspection by Harris Pye, a boiler repair specialist, mere months before the accident.

Investigators also discovered evidence of copper being used in the boiler drums where the fatal fracture occurred. Copper is not used as a weld or repair material, and the investigators concluded that the metal could only have been used to mask cracks or signs of fatigue.

Additionally, the boiler access hatches for inspection and maintenance were found to be too small for access by some crew or surveyors.

According to class society rules, if a boiler has not been surveyed internally hydraulic tests are required. This involves filling the boiler with water, sealing it and applying a specified test pressure using a feedwater or hydrostatic pump. Typical test pressure is around 80 bar.

“According to documents the boiler was subjected to a 70 bar hydraulic test with the previous inspection in 2001 not involving a hydraulic test,” The report says. “Thus BV did not appear to follow its own rules regarding hydraulic testing".

BV director of communications Philippe Boisson defended the society’s position, saying BV applied its existing rules concerning boiler inspection and testing. “In particular, the vessel’s last hydraulic test in July 2002, was conducted well above working pressure and safety valve setting,” he said. “Since the accident BV has taken steps, as have other classification societies, to improve rules and procedures applicable to older boilers.”

Norway was one of the last steam-powered cruiseships in the region at the time and after the accident it was removed from service and eventually scrapped.

However, the report may also pose questions about the maintenance of the 230-strong steam powered liquefied natural gas fleet, which includes some vessels more than 30 years’ old.

Read more about the history of the SS Norway from Maritime Matters. You can also download a video tour of the engine room from our Martin's Marine Engineering Page Video Vault. You can download the full NTSB report here.

Big oil spill in Norway and Korea

StatoilHydro: Broken hose caused 25,000 barrel North Sea oil spill
2007-12-14 15:20:43 -

OSLO, Norway (AP) - Government-controlled oil company StatoilHydro ASA said Friday that a 25,000-barrel North Sea oil spill was caused by a broken hose used to load crude onto tankers. The spill, which happened Wednesday, was the second worst in Norway's offshore history.

The oil, spilled at the Statfjord offshore field, was not expected to reach the Norwegian coast, about 200 kilometers (125 miles) away, and much of the light crude was expected to evaporate or break up in waves, the company and experts said.

The crude spilled when it was being transferred to an oil tanker from a floating loading buoy. StatoilHydro said it had used a remotely operated miniature submarine to inspect the system and that it found a 19-inch (48-centimeter) diameter flexible oil hose that had been torn in two. The cause of the break was not immediately determined.

The company said no more oil was leaking and the Statfjord field was producing normally. StatoilHydro said it would try to used spill collection systems to remove the remaining oil from the surface of the ocean.

The spill was smaller than the worst oil leak in the history of the Norwegian oil industry, in 1977, when an oil platform blowout spewed 78,000 barrels of crude into the ocean.
StatoilHydro employs about 31,000 people and is the main player on the offshore fields that make Norway a major exporter of oil and natural gas.

On the Net

And halfway around the world in Korea, another spill...

Master praised, Samsung slammed over spill
Fairplay 10 December 2007

SEOUL 10 December – Nearly 10,000 people are involved in clean-up as the Hebei Spirit oil slick spreads 40km along the shore, polluting 8,200 hectares of coastline. Five aircraft and 138 specialist ships have been deployed.

The breaches in the vessel’s hull have now been breached while the remaining oil is transferred into the tanker Seyang, before Hebei Spirit is towed into Daesan port. Taean Coast Guard is investigating 20 people, including the tugmasters, while the tanker’s manager, V.Ships Singapore, today praised the master “The quick action of Capt Chawla helped lessen the oil spilled,” said V.Ships. “The Hebei Spirit anchored in a designated area, kept a proper anchor watch and displayed proper anchor signals. When they realised that the tugs were going to pass close by in a potentially dangerous situation, they attempted VHF communication – however without response.

Subsequently, the Marine Police was contacted and they also attempted to contact the tug, again without response.” “Samsung needs to step up and take responsibility,” a spokesman for the owners told Fairplay today. Shares in Samsung Corp, Samsung HI (charterer of the crane and tug) and insurer Samsung Fire & Marine dropped by 3-8% today.

The tanker master was praised for trying to move his ship by slackening the anchor chain and using the main engine, and for quick use of ballast after the collision to reduce the outflow of oil.

Wilkipedia keeps a list of oil spill accidents, check it out here.

Saturday, December 15, 2007

Offloading regulatory responsibilities

Below. An interesting article on an accident in Australia highlighting the "self regulation" pitfalls. It seems people want to make money, but no one wants to get dirty, so they offload the responsibilities onto others. - Martin

‘Hands-off’ safety board blamed
From Fairplay 14 December 2007

BRISBANE 14 December – A board of Inquiry report into the Wunma incident, in which an Australian ore carrier was abandoned in Cyclone Nelson, has slammed Maritime Safety Queensland (MSQ) for its excessively “hands off” approach to regulation. “The Queensland government should consider whether legislative, administrative and financial arrangements have led to a system of self-regulation, and, if so, whether such a system serves the public interest,” the report concluded. “Beyond the [ship] registration stage, MSQ has a restricted view of its powers as a regulator,” the report declared, saying that this was demonstrated in MSQ’s powerlessness to insist on a cyclone mooring for Wunma, despite the fact that two senior MSQ officials had voiced safety concerns. The 494-page report also highlighted what it saw as weaknesses in the self-discharger’s ability to shed excess storm water, and identified various operational and “systemic” failures that led to Wumna taking on water and losing power when it was hit by the cyclone in the Gulf of Carpentaria in February. Reasons for the incident included the lack of a sheltered cyclone mooring and the inability of the ship to offload cargo to shore – meaning the ship took to sea in a loaded condition when a tropical low was threatening. There was also a failure to obtain current weather information by e-mail or satellite phone. The report seems sure to renew debate over the regulator’s role in achieving optimal maritime safety.

You can read the full report here.

Tuesday, December 11, 2007

Whale in the News

When a barge named ATL 2701 makes its ungainly way into the Port of Toronto early next week, it is unlikely to make any more waves than the average freighter would.
Had the 82-metre vessel kept its original name, Irving Whale, it might be a different story. To the casual eye, the ATL 2701 will carry nothing more than a massive set of pipes and racks bound for the much-debated Portlands Energy Centre, now under construction on the city's east-end waterfront.
But, to environmentalists who oppose the power plant, the renamed barge will carry a darkly ironic cargo of bad memories from one of Canada's most notorious nautical disasters: the Irving Whale's 1970 sinking in the Gulf of St. Lawrence off Prince Edward Island, taking 4,200 tonnes of fuel oil down with it. About 1,100 tonnes of oil spilled into the ocean, including 5,700 kilograms of oil laced with PCBs.
"Well, it's consistent," chuckled Peter Tabuns, the NDP member of the legislature for Toronto-Danforth, where the power plant's most vociferous detractors live. "It's one bad environmental decision and happenstance after another."
A $42-million recovery effort, funded mostly by the federal government, brought the Irving Whale and about one-quarter of its toxic cargo back from its watery grave in 1996; the rest of the oil was swallowed by the sea.
The vessel was refurbished, renamed and sent back into service by Atlantic Towing Ltd., on behalf of its owner, J. D. Irving Ltd., in 2001.
While they're all for recycling, those who feel the natural-gas-powered Portlands Energy Centre is a bad environmental move see the barge as a bit player in a sorry drama that will further pollute Toronto's air.
"It is a pretty big irony that one of the worst environmental disasters is delivering equipment for what people in my community consider to be another environmental disaster," Paula Fletcher, city councillor for Ward 30 (Toronto-Danforth), said yesterday. "The oil-spill ship is now delivering equipment for the gas-fired plant."
Ted Gruetzner, spokesman for the power plant, said the former Irving Whale is expected to arrive from Dartmouth early next week, carrying three massive pipes each five storeys high and weighing 272,000 kilograms.
It will be the second of two such shipments, the first of which, consisting of two pipes, was to arrive this morning on a barge from Hamilton.
"It's an interesting twist," Mr. Gruetzner said of the ATL 2701's dubious past, but "that's sort of ancient history for the barge, and it's not carrying its former cargo.
"And this [gas-powered plant] is actually cleaner for the environment than a lot of alternative sources of power."
The less-than-clean story of the Irving Whale began in 1966, when it was built for J. D. Irving in Saint John with eight tanks for hauling oil.
It sank, loaded with 4,200 tons of bunker C heavy fuel oil, during a storm on Sept. 7, 1970, en route from Halifax to Bathurst, N.B.
Oil fouled about 80 kilometres of shoreline on the nearby Magdalen Islands and leaked into the Atlantic Ocean from the wreck, albeit slowly after the initial sinking, over the next 26 years, as officials worked on a salvage plan.
Meanwhile, the presence of more-toxic PCB-laden oil within the barge's cargo heating system added urgency and complexity to the recovery that followed on July 30, 1996.
The federal government sued J. D. Irving Ltd. in an effort to recover the $42.4-million it spent on the salvage effort. In 2000, Ottawa settled out of court for a $5-million contribution from Irving, which had argued that the recovery mission was reckless.
Opponents of the Toronto power plant, who lost their battle to stop the project, "still think it's going to be threatening air quality" in the city, Mr. Tabuns said. They will see the Irving Whale's part in it as "fitting and consistent with everything that's happened here."
The 550-megawatt plant is expected to begin operating next June.

See video footage of the Irving Whale accident on CBC's website

Monday, December 03, 2007

Korean built cruise ships coming soon

The Korean industrial group STX has purchased a 39% stake in Norway's Aker Yards in late October 2007. The large Korean shipbuilding conglomerate seems to be going after the "specialized" shipbuilding European yards.

Aker Yards operates 18 ship yards across Europe and Brazil, and has a workforce of about 20,000 people. They are responsible for building the worlds largest passenger ship, the Freedom Class of ships, for Royal Caribbean. Aker also specializes in sophisticate offshore vessels and ferries.

STX is a well known South Korean shipbuilder producing countless cargo ships of all kinds, quickly and for a lower cost. The purchase into Aker Yards was made by STX subsidiary Rambera, and the unit will be renamed STX Norway.

Here's STX self description from their website...

"STX Shipbuilding Co., Ltd. has built about 500 ships over the last 40 years in Busan and Jinhae. Based on its great stock of experience and outstanding technical manpower, it has been the driving force behind the nation’s transformation into a major maritime power and a leader in the shipbuilding industry. Consequently, STX has become Korea’s representative shipbuilder.

STX Shipbuilding. is possessed of specialized facilities and layout for building ships in the 30,000~80,000ton class, and in particular, Shipbuilding has global competitiveness in designing and building product carriers, container ships and LPG Carriers. In addition, through vertical integration with STX Corporation, World Best manufacturer of diesel engines and marine equipment, it has further solidified its business structure.

STX Shipbuilding is planning to expand its business to include highly lucrative types of ships such as pure car carriers and Ferries, and is preparing to launch new services like Special Ships, offshore & plants and REITs to strengthen its business structure. In 2003, STX Shipbuilding has listed on the Korea Stock Exchange and go public. Through transparent management, it will try its best to keep its shareholders, customers, and employees satisfied."

Read Aker's brief comment on the topic.