December 7, 2015


Climate, environment, corruption and more

November was a busy month for the industry – not least for the horse trading and position-taking ahead of the COP21 meeting going on in Paris. In the meantime, alliances on technology and skills initiatives continued to make headlines as the industry looks for way to save costs and drive efficiencies.

Shipping grapples with climate change

The shipping industry is locked in a battle of wills with the UNFCC (United Nations Framework Convention on Climate Change) and green NGOs at the COP21 meeting in Paris on measures to combat climate change. In the industry’s corner is the International Chamber of Shipping which is seeking to impress on regulators that the fuel efficiency measures being taken by the merchant fleet, will deliver far more ambitious CO2 reductions than the pledges made by governments.

The UNFCC has said government commitments overall should reduce CO2 emissions per capita by just 5% in 2030, compared to 2010. Shipping has already reduced total CO2 emissions by more than 10% between 2007 and 2012 despite the continuing growth in maritime trade and reduced CO2 emitted per tonne kilometre by around 20% in the past decade.

Responding to recent concerns that measures being taken by shipping fall short of the level required to contain climate change, ICS has argued that the UN negotiations have already agreed an approach regarding the obligations of different sectors of the global economy, something, most nations have recognised.

Ballast Water Management Convention on the brink

Indonesia’s accession to the Ballast Water Management Convention during the IMO Assembly means the Convention will finally enter into force worldwide in November 2016.

Ratification is still subject to IMO’s verification of the gross tonnage data relating to Indonesia’s registered fleet. Morocco has also signed up to the convention with Finland also expected to do so.

The ICS immediately warned that the IMO must finalise the revision of the G8 Type Approval Guidelines as soon as possible, in order to ensure that shipowners can be confident that the equipment they will have to install will be effective and be regarded as fully compliant.

Neither does entry into force of the IMO regime resolve the uncertainty around the more stringent US regime for treatment equipment, which started to be enforced in January. No systems are expected to receive Type Approval under the US regime until the end of 2016 at the soonest.

BIMCO Anti-Corruption clause

BIMCO has introduced a new clause that aims to give owners and charterers a contractual platform for co-operative action to resist demands for illegal payments from port officials and others.

BIMCO recognises the importance of a united approach by the shipping industry towards stamping out corruption in the ports and places where the world’s merchant fleet trades. Use of the clause is voluntary but it has been developed for owners and charterers who want to combat corrupt practices using a clearly worded framework in charter parties.

The clause can be used in any jurisdiction because it applies the anti-corruption laws applicable to each of the parties and the local law of the place where the ship is located. A key provision is a mechanism for owners to issue a note of protest if an illegal demand is made and is not withdrawn. This triggers a co-operative response by charterers and owners to the demand. A safeguard for the owners if they issue a protest to resist a demand and the ship is delayed, is that charterers cannot place the ship off-hire.

Knowledge benchmark software

Seagull Maritime has launched a software tool designed to benchmark seafarer knowledge levels which it hopes will allow shipowners and operators to compare their crew and potential recruits with industry peers.

The system will provide shipping companies with online access to data that can help them take objective decisions on recruitment sources and identify areas where further training is required.

Using its existing Crew Evaluation System, which holds records from 250 companies and from more than 500,000 test results, Seagull plans to enable customers to benchmark knowledge of their crews against industry data identifying attributes that include nationality, rank, and crew pool.

Available online as a web-based application that provides reports and graphics for detailed analysis, users can access aggregated data to compare their crew knowledge levels against generalised results achieved by other seafarers.

Co-operation for Inmarsat and Ericsson

Inmarsat and Ericsson have signed a strategic maritime agreement that will see the two companies jointly develop satellite and application integration packages to connect ships with services in the cloud and onshore.

Ericsson becomes a distribution partner for XpressLink, Inmarsat’s combined L-band and Ku-band VSAT network for the maritime market, which will be extended to Fleet Xpress when new constellation enters global commercial service.

The strategic relationship will also pave the way for integration between Ericsson’s Maritime ICT Cloud and connectivity delivered over Inmarsat’s satellite communications network.

Ericsson’s Maritime ICT Cloud is a managed solution that connects vessels at sea to shore-based operations, including maintenance service providers, customer support centres, port operations and authorities.

Operating costs to rise in 2016

The Moore Stephens OpCost survey has predicted an increase in vessel operating costs for the next two years, with crew wages, repairs, maintenance and dry-docking the categories most likely to increase significantly.

The annual OpCost survey is based on responses from shipowners and managers predominantly from Europe and Asia which revealed that vessel operating costs were expected to rise by 2.8% in 2015 and by 3.1% in 2016.

Crew wages are among the biggest risers with other crew costs also expected to rise. The cost of repairs and maintenance was higher still, while dry-docking expenditure – no doubt driven by the ratification of the Ballast Water Management Convention was also predicted to rise substantially.

Insurance costs will rise too though not by as much with small rises in both the hull and machinery and P&I sectors, the latter of which is expected to be slightly lower.

Maersk Line plots course for increased efficiencies

Maersk Line has announced that it will accelerate a number of its already established cost and efficiency initiatives, based around standardisation, automation and digitalisation of processes in an attempt to increase cost savings and efficiencies.

At a higher level, the company said it also intends to reduce its network capacity and postpone further investments while it escalates its internal process changes.

The dire state of the container shipping market has prompted Maersk to seek savings of US$250 million over the next two years through standardisation, automation and digitalisation efforts.

“We are on a journey to transform Maersk Line. We will make the organisation leaner and simpler. We want to improve our customer experience digitally and at the same time work as efficiently as possible,” said Maersk Line CEO, Søren Skou.

Maersk Line has 23,000 shoreside staff and expects to shed at least 4,000 jobs by the end of 2017 using automation and digitalisation of processes, with redundancies minimised through natural attrition.

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