UACC CEO, Jens Grønning

UACC’s CEO, Jens Grønning, wants a balanced approach to risk. “Managing risk is one of the most important tasks we face,” he said. “We need to deal with various risk factors on a daily basis. We have always minimised risk as much as we feel is possible, and we try hard to manage the fine balance between what is theoretically possible and what is feasible when running international shipping operations.”

Mr Grønning continued: “In many ways the chemical sector is more ‘industrialised’, and therefore more steady than other more volatile shipping segments such as the products market. From a risk point-of-view, we believe our presence in both the chemical and products markets balance each other out, at least to a certain extent. In addition, we operate in pools because we like the scale it creates and the partnership between owners.”

UACC vessels frequently sail through piracy-affected areas in the Indian Ocean. Regarding this matter, Mr Grønning commented:

“To deal with the risk of attacks by pirates we use armed guards, and we follow the guidance established under Best Management Practice 4 (BMP4). Our ships have been attacked twice, but each time they have been deterred because we were prepared, well trained, and use armed guards to defend the crew, ship and cargo.”

Mewis Duct, courtesy Becker Marine Systems

Reducing emissions is a growing priority for many owners, including UACC, and in the area of environmental risk and how to find efficiency gains, Mr Grønning has clear views. UACC has tested new silicon hull paint available in the market, and the four ships on order will all have Mewis ducts installed. Mr Grønning said: “I am a believer in the Mewis duct, but we have only done model tests so far and I am looking forward to seeing the results of the sea trials. The important thing to remember is that if we can grab 1, 2, 3, 4% savings here and there, they all add up. If we get to 5% fuel savings, it will easily represent a saving of $1,000 a day at sea.”

Mr Grønning pointed out that UACC do slow steam on ballast passages and that its vessels occasionally go down to ultra-slow speed, and especially on ships which are equipped with slide fuel valves and blowers.

Referring to alternative fuels, Mr Grønning believes that LNG is credible, but that it is not a viable solution for the tanker sector any time soon, especially with the current highly diversified trading pattern which includes both remote and under-developed ports. However, Mr Grønning said that he believes LNG is an interesting option for ships plying a regular trade, such as ferries, container
ships and the like.

Mr Grønning believes UACC’s future prospects are bright. “We have faced many challenges already. We were launched during the sub-prime crisis, and that affected things.

The growth in the petrochemical and refinery sectors is very strong and intact, and with refining and production capacity declining in the west, the tonne/mile ratio is going to be favourably affected by sourcing cargoes from farther afield, such as the Arabian Gulf and India,” he said.

Danish-born Jens Grønning joined UACC in October 2008 and is its President and CEO. He was previously COO of Eitzen Chemical ASA, one of the world’s largest chemical transportation companies.  He has more than 20 years’ experience in the shipping industry, with extensive experience of shipping and finance.

He graduated with a higher commercial examination from Copenhagen Business School and took an extensive management course at IMD Business School, Lausanne, Switzerland.

The burned out hull of a suspected pirate skiff drifts near the amphibious dock landing ship USS Ashland (LSD 48). U.S. Navy photo by Mass Communication Specialist 2nd Class Jason R. Zalasky

A federal appeals court in Virginia ruled this week on the definition of piracy on the high seas, upholding the convictions and life sentences of five Somali men charged with piracy for their role in the 2010 attack on USS Nicholas and at the same time remanding a seperate but similar case where the piracy charge was dropped.

The five Somalis in the Nicholas attack were convicted on November 24, 2010 by a federal jury in Norfolk, VA on a number of counts including piracy, which is punishable by life in prison.  During the attack, the five men used a mothership to stage an attack and fire upon the USS Nicholas, which they unfortunately had mistaken for a merchant vessel, while west of the Seychelles in the Indian Ocean.  The USS Nicholas quickly apprehended the suspects, and sank their vessels for good measure.  The men were later sentenced to life in prison followed by a consecutive 80 years.  The case marked the first piracy conviction in the U.S. since 1819.

Attorney’s of the defendants challenged the convictions and life-plus-eighty-year sentences, appealing on several grounds including that their unsuccessful attempt to hijack the USS Nicholas did not amount to piracy offense.

During the appeal, attorney’s for the defendants argued that the crime of piracy has been narrowly defined as robbery at sea, i.e., seizing or otherwise robbing a vessel. The basis of the appeal was that because the men boarded the Nicholas only as captives and had not actually taken any property, the piracy charge should be overturned.

In a separate case, the Fourth Circuit also vacated the pre-trial ruling involving an alleged separate but similar attack on the USS Ashland by five other Somalia men where the piracy count was dismissed from the indictment.

In the case of the attack on USS Ashland, on April 10, 2010 the Somali men chased and fired upon the amphibious dock landing ship that they had somehow mistaken for a vulnerable merchant vessel in the Gulf of Aden.  True to form, the USS Ashland apprehended the suspects and sank the pirate skiffs.

The Fourth Circuit remanded the case back to the District Court for further proceedings that will likely pursue the piracy charge.

“Today, the Fourth Circuit made clear that anyone who attempts an armed hijacking of another vessel on the high seas is a pirate under U.S. law,” said U.S. Attorney for the Eastern District of Virginia Neil H. MacBride. “Since the earliest days of this country, piracy has been a serious crime. That is why Congress in 1819 chose a definition of piracy that would reflect advancements in the law of nations. For decades, the international community has considered violent attacks on the high seas as an act of piracy, and today’s ruling will strengthen our ability to hold those who attack U.S. vessels by force accountable, regardless of whether they are successful or not.”

Photo: CFP

A brand new luxury Chinese-built cruise ship proved to tall for a suspension bridge spanning the Oujiang River located in Wenzhou city, Zhejiang, China after just leaving the shipyard.  The newly-built US $44 million “Mingzhu No. 7″ cruise ship struck the bottom of the bridge Wednesday morning, shearing off two of the vessels funnels as well as causing some damage to the bridge.

The captain of the ship has apparently already admitted that he had forgot to take into account the high tide and lack of passengers and cargo when making his calculations.

The new ship was built to accommodate up to 1,000 passengers however did not have any onboard at the time.  The ships maiden voyage is set for October.

Hurricane Irene, a stark reminder that tropical systems can affect the Northeast and of the threat of inland flooding. Image: NOAA

Conditions in the atmosphere and the ocean favor a near-normal hurricane season in the Atlantic Basin this season, NOAA announced today from Miami at its Atlantic Oceanographic and Meteorological Laboratory, and home to the Hurricane Research Division.

For the entire six-month season, which begins June 1, NOAA’s Climate Prediction Center says there’s a 70 percent chance of nine to 15 named storms (with top winds of 39 mph or higher), of which four to eight will strengthen to a hurricane (with top winds of 74 mph or higher) and of those one to three will become major hurricanes (with top winds of 111 mph or higher, ranking Category 3, 4 or 5). Based on the period 1981-2010, an average season produces 12 named storms with six hurricanes, including three major hurricanes.

“NOAA’s outlook predicts a less active season compared to recent years,” said NOAA Administrator Jane Lubchenco, Ph.D. “But regardless of the outlook, it’s vital for anyone living or vacationing in hurricane-prone locations to be prepared. We have a stark reminder this year with the 20th anniversary of Hurricane Andrew.” Andrew, the Category 5 hurricane that devastated South Florida on August 24, 1992, was the first storm in a late-starting season that produced only six named storms.

Favoring storm development in 2012: the continuation of the overall conditions associated with the Atlantic high-activity era that began in 1995, in addition to near-average sea surface temperatures across much of the tropical Atlantic Ocean and Caribbean Sea, known as the Main Development Region. Two factors now in place that can limit storm development, if they persist, are: strong wind shear, which is hostile to hurricane formation in the Main Development Region, and cooler sea surface temperatures in the far eastern Atlantic.

“Another potentially competing climate factor would be El Niño if it develops by late summer to early fall. In that case, conditions could be less conducive for hurricane formation and intensification during the peak months (August-October) of the season, possibly shifting the activity toward the lower end of the predicted range,” said Gerry Bell, Ph.D., lead seasonal hurricane forecaster at NOAA’s Climate Prediction Center.

“NOAA’s improvement in monitoring and predicting hurricanes has been remarkable over the decades since Andrew, in large part because of our sustained commitment to research and better technology. But more work remains to unlock the secrets of hurricanes, especially in the area of rapid intensification and weakening of storms,” said Lubchenco. “We’re stepping up to meet this challenge through our Hurricane Forecast Improvement Project, which has already demonstrated exciting early progress toward improving storm intensity forecasts.”

Lubchenco added that more accurate forecasts about a storm’s intensity at landfall and extending the forecast period beyond five days will help America become a more Weather-Ready Nation.

In a more immediate example of research supporting hurricane forecasting, NOAA this season is introducing enhancements to two of the computer models available to hurricane forecasters – the Hurricane Weather Research and Forecasting (HWRF) and the Geophysical Fluid Dynamics Laboratory (GFDL) models. The HWRF model has been upgraded with a higher resolution and improved atmospheric physics. This latest version has demonstrated a 20 to 25 percent improvement in track forecasts and a 15 percent improvement in intensity forecasts relative to the previous version while also showing improvement in the representation of storm structure and size. Improvements to the GFDL model for 2012 include physics upgrades that are expected to reduce or eliminate a high bias in the model’s intensity forecasts.

The seasonal outlook does not predict how many storms will hit land. Forecasts for individual storms and their impacts are provided by NOAA’s National Hurricane Center, which continuously monitors the tropics for storm development and tracking throughout the season using an array of tools including satellites, advance computer modeling, hurricane hunter aircraft, and land- and ocean-based observations sources such as radars and buoys.

Next week, May 27- June 2, is national Hurricane Preparedness Week. To help prepare residents of hurricane-prone areas, video and audio public service announcements featuring NOAA hurricane experts and the FEMA administrator are available in both English and Spanish.

“Every hurricane season we ask families, communities, and businesses to ensure they are prepared and visit www.ready.gov/hurricanes,” said Tim Manning, FEMA deputy administrator for protection and national preparedness. “Being prepared includes developing a family emergency plan, putting an emergency kit together or updating your existing kit, keeping important papers and valuables in a safe place, and getting involved to ensure your community is ready.”

NOAA’s outlook for the Eastern Pacific basin is for a near-normal hurricane season and the Central Pacific basin is expected to have a below-normal season. NOAA will issue an updated seasonal outlook for the Atlantic hurricane season in early August, just prior to the historical peak of the season.

[Source: NOAA]

t Mr Ali Obaid Al-Yabhouni, CEO of ADNATCO and NGSCO, image: Lloyd's Register

What do you think are the most important changes your company and the industry can make to meet the challenges of new regulations, high-energy prices and the need for more efficient ships?

In the short term, our aim is full compliance with the MARPOL Convention, particularly Chapter 4 of Annex VI. We aim to have a Ship Energy Efficiency Management Plan (SEEMP) implemented in all the vessels in our fleet by the beginning of next year.

In the longer term, there is a clear need to invest in new energy efficient ships. Current designs can lead to a sharp decrease in energy consumption and, as fuel prices rise, this makes increasing commercial sense. Of course, charter rates are currently at a very low level, but shipowners need the vision and courage to invest in new vessels that are both energy efficient and have lower emissions. Inversely, new building costs have also come down, so there is an incentive for forward looking companies such as ADNATCO to invest in new tonnage, and the ADNOC Group of Companies has plans to continue ordering new vessels.

We feel that the time is right to continue expanding our fleet with a long-term eye to the future market in which energy efficient facilities, bunkering barges, storage tanks onboard and ashore etc. vessels are valued by charterers.

Will most deep sea ships still be burning HFO in 2020? And, if not, what fuel will they be using – for instance, will low sulphur MDO be available in sufficient quantities?

Fuel choice is clearly a major challenge facing the global shipping industry in terms of cost, efficiency and emissions. Whereas the burning of LNG as fuel is a practical and clean solution for LNG tankers, such as our own LNG tanker fleet, it is unlikely to be an option for other vessels. Burning LNG for propulsion power onboard ships other than LNG carriers will require massive investments in bunkering facilities, bunkering barges, storage tanks onboard and ashore etc.

The reality is that there is at present no readily available substitute for HFO. Low sulphur MDO represents an interesting alternative but, for the time being, is not available in sufficient quantities due to insufficient refining capacity. However, as a shipping company owned by a national oil company with significant refining capacity, I would point out that the refining industry has historically shown itself ready to invest in supplying changing demand patterns. Reconfiguring refineries and installing new units takes time, but if the global shipping industry decides to go down the MDO route, the refining industry will respond accordingly. However, this is not something that can be done unilaterally by any single company. There has to be consensus in the industry and a decision that this is the best way forward.

How can other stakeholders in the shipping industry – class, shipbuilders, charterers, insurers and banks – best help operators to manage the challenges of the future?

Shipbuilders and class have a greater role to play in this regard, because of the vast resources and experience they have in designing the new ships with more efficient and environment friendly engines.  The shipowners are ready to spend extra provided the technology is available.

The class in collaboration with shipbuilders could focus on increased research related to energy efficient ship designs, including using low sulphur and alternative fuels, installing fuel efficient and emission compliant engines, integrated power plants, and the use of exhaust-after-treatment devices.

In an ideal world, charterers would reward energy efficient ships with increased rates, while insurers would reduce their premium rates for new energy efficient ships. We need market-based mechanisms to ensure that this happens.

About Abu Dhabi National Tanker Co…

(ADNATCO) was established in 1975 for the transportation of petroleum products. It is a wholly-owned subsidiary of Abu Dhabi National Oil Company (ADNOC).

ADNATCO owns and operates a fleet of oil tankers, a molten sulphur carrier and two ro-ro vessels and is involved in the marine
transportation of petroleum products and the bulk carrying of sulphur.  National Gas Shipping Company (NGSCO) was formed in December, 1993 to transport liquefied natural gas (LNG) on behalf of Abu Dhabi Gas Liquefaction Company (ADGAS). 

NGSCO operates a fleet of eight LNG carriers, each with a capacity for 137,000 m3 of LNG. NGSCO took deliver y of it s first vessel Al Khaznah in July 1994, followed by a further seven vessels, the last of which was delivered in June 1997. The first four ships were built in Japan and the other four in Finland. Both the Japanese and Finnish built vessels are Moss Rosenberg designs and, when built, were the largest LNG carriers in the world.

The company’s LNG fleet was initially managed by third parties but since the end of 2007 all vessels are fully managed by NGSCO.

Stabilized-volatility would be the most accurate description of the oil markets this past week.  Overall crude prices closed down only about $1 bbl this week; but we have seen them down several dollars at different stages throughout the week and during each trading day.  While the KPI Bridge Oil Composite continues to go down,  fuel oil and gas oil prices are just getting in line with the overall market trend of the last several weeks.  It would not be unreasonable to expect bunker prices to stabilize next week barring any major change in the crude markets.

It is amazing to see how volatile operational costs have become for ship-owner’s and charterer’s.  In this month alone,  we have seen the KPI Bridge Oil Composite go down over $57 MT.  For a vessel burning 20 MT per day that represents decrease of $1140 to daily operating costs.  With changes like this,  a spot charter can go from a winner to a loser quickly, and visa-verse.

With a short week next week, we should all prepare for a lot more volatility.  Offices in the United States will be closes on Monday 28 May in observance of Memorial Day.

About the KPI Bridge Oil Composite                                                                                   

The KPI Bridge Oil Composite is a calculated fuel number based on 14 ports strategically positioned worldwide.  It is calculated on a weekly basis blending 90% fuel oil prices with 10% distillate prices.  The idea behind the number is that it would represent actual fuel costs on a global basis and what vessels would consume on average.  This number will not fluctuate as quickly as daily prices and can easily be hedged or used for voyage calculations.

Fly-over shots of the M/V Rena grounded on the Astrolabe Reef on October 8. Photo: Dudley Clemens

The Master and Second Officer of the stricken M/V Rena that has been stuck on Astrolabe Reef since grounding on October 5 have each been sentenced to seven months imprisonment for their role in the grounding.

The men were sentenced on a total of 11 charges laid out by Maritime New Zealand that included operating a vessel in a manner causing unnecessary danger or risk, discharging harmful substances from ships, and willfully attempting to alter the course of justice by altering ship’s documents after the grounding.

MNZ laid six charges against the Master, Mauro Balomaga, and five charges against the Second Officer, Leonil Relon, following the grounding. Both men pleaded guilty to all charges against them.

“In this case, the Master and the Second Officer have breached the most basic fundamental principles of safe navigation,” said Keith Manch, Director of MNZ, who welcomed the charges.

An investigation into the grounding found that the Master and Second Officer had deviated from their original passage plan from Napier to Tauranga to save time, but failed to properly assess navigational hazards of the new plan and also not adequately record these changes.

According to the MNZ investigation, the final alteration to the course of the ship occurred around 1.35am and put Rena directly on target to hit the Astrolabe Reef, where it would eventually run aground at 2.14am.

About 10 minutes prior to the grounding, the investigation found, the Astrolabe Reef appeared as blip on Rena’s radar, which would have provided sufficient lead time to change course to avoid the reef had the Master not dismissed it as a small vessel.

“If there is a need to deviate from a prepared passage plan, the alterations must be plotted and the new projected path carefully assessed to ensure all potential navigational hazards are identified,” said Manch.

The Master and Second officer were not only targeted for their actions prior to grounding, but it was their actions afterwards that would also land them in the hot seat.

During the course of the MNZ investigation, Manch added, both officers admitted making alterations after the grounding to the ship’s GPS log, its passage plan and its computer to mislead investigating authorities.

“This offending is also very serious in that it caused genuine confusion for investigators trying to piece together the events that led to the grounding.

“It is vital that when these types of events do take place, we can find out how and why they have happened to help prevent such an event happening again.”

In a separate prosecution, MNZ has also laid a charge under the RMA against the owner of Rena, Daina Shipping Co.

Earlier this week the Rena salvage reached a milestone after surpassing 800 recovered containers from the vessel. The vessel had a total of 1368 containers when it grounded.

Details of the charges against the Master and Second Officer can be found below.

Mauro Balomaga, the ship’s Master:

• One charge under section 65 of the Maritime Transport Act (MTA) 1994, “for operating a vessel in a manner causing unnecessary danger or risk”.
• One charge under section 338 (1B) and (15B) of the Resource Management Act 1991 (RMA) relating to the “discharge of harmful substances from ships or offshore installations”.
• Four charges under S117(e) & 66 of the Crimes Act, that he “wilfully attempted to pervert the course of justice” by altering ship’s documents subsequent to the grounding.

Leonil Relon, the ship’s Second Officer (Navigation):

• One charge under section 65 of the Maritime Transport Act (MTA) 1994, “for operating a vessel in a manner causing unnecessary danger or risk”.
• One charge under section 338 (1B) and (15B) of the Resource Management Act 1991 (RMA) relating to the “discharge of harmful substances from ships or offshore installations”.
• Three charges under S117(e) & 66 of the Crimes Act, that he “wilfully attempted to pervert the course of justice” by altering ship’s documents subsequent to the grounding.

APM Terminals Portsmouth Virginia, the largest privately owned terminal in North America. Image: APM Terminals

COPENHAGEN — The port-operating arm of Danish industrial conglomerate A.P. Moller-Maersk A/S (MAERSK-B.KO), APM Terminals, said Thursday it has made an offer to the state of Virginia to operate the cargo traffic facilities at the U.S. Port of Virginia.

In return for the long-term concession, APM Terminals offers to transfer ownership of its facility in the Portsmouth Marine Terminal at the port to the Virginia administration, in a strategic partnership deal that the company estimates to have a total value to the state of between $3 billion and $4 billion.

The proposal includes operation of freight facilities at the Port of Virginia, which is comprised by four marine terminals and adjacent inland services, all centered around the ice-free, natural harbor of Hampton Roads.

“Our proposal provides for the lowest cost, long-term solution for future growth at this time of a stabilizing economy and the eventual expansion of global commerce,” said APM Terminals Americas Region President Eric Sisco.

Included in the value estimate are initial payments, fixed concession payments, revenue sharing, capital investments and tax benefits, transferring market risk from the Commonwealth to the private sector, APM Terminals said.

The offer has been submitted to Virginia’s Office of Transportation Public-Private Partnerships and will undergo a detailed review in the coming months, APM Terminals said.

-By Flemming Emil Hansen, Copenhagen Bureau

View Larger Map

Time Charter Market, via Clarksons (click for larger)

But the results topped estimates, and the company, which recently undertook a restructuring effort, said it expects its second-quarter results to be better than the first.

Shares were up 4.4% in premarket trading to $5.20. Through Thursday’s close, the stock was up 16% so far this year.

The company, which owns and operates oil tankers, added that it won’t be paying out a dividend in the first quarter.

Frontline completed a restructuring of its business late last year, selling 15 of its wholly-owned special-purpose companies to create a new company, Frontline 2012 Ltd., which it will manage through a subsidiary. Following the restructuring, the company reduced its operating fleet to 48 vessels from 58 vessels.

Frontline reported a first-quarter profit of $7.18 million, or 9 cents a basic share, down from $15.5 million, or 20 cents a share, a year earlier. The latest quarter included a loss of $2.2 million on the sale of a double hull tanker and a $9.4 million gain from the termination of the charter party for a single hull carrier.

Operating revenue dropped 29% to $167.3 million, while operating expenses fell 26%.

Analysts surveyed by Thomson Reuters had seen a loss of 10 cents on revenue of $91 million.

-By Kristin Jones; Dow Jones Newswires

Original drawing of the apparently "unsinkable" Titanic, image courtesy Lloyd's Register HORIZONs Magazine

-By Christopher Browne, Editor of Lloyd’s Register HORIZONs magazine

The message was brief and cryptic: “Struck an iceberg and sank in latitude 41.16 N, longitude 50.14 W”. It might have been just another daily entry in Lloyd’s Register’s Casualty Returns. But it hid perhaps the most infamous event in shipping history – the sinking of the Titanic.

That was 100 years ago – on 14 April 1912 to be precise. Since then a flurry of historians, scientists, investigators, conspiracy theorists and media pundits have pondered and puzzled over just why this great and ‘unsinkable’ vessel should founder on a lone iceberg.

A spectacular array of events are being held this year in the seven European and North American cities involved in the mighty ship’s last voyage. However behind the ritual and razzamatazz are some curious post-disaster stories including one about the role of Lloyd’s Register.

A few days after the incident, the national press wrote a series of reports suggesting the Titanic had been built ‘considerably in excess of the requirements’ of Lloyd’s Register. Although we had not classed the vessel, and the information was patently wrong, you could argue it was a form of faint praise by association. Although our Secretary at the time, Sir Andrew Scott, didn’t quite see it like that.

“I am directed to say that these statements are inaccurate. On the contrary, in important parts of her structure the vessel as built did not come up to the requirements of Lloyd’s Register for a vessel of her dimensions,” he wrote in a letter to The Times of London.

“I do not for a moment suggest that this circumstance had any bearing whatever upon the loss of the vessel and therefore, for obvious reasons, this letter has been delayed until after the close of the Inquiry (the Mersey Committee set up in the UK to investigate the loss). But in justice to this society and to those who rely upon its classification, it is felt to be only right to dispel the erroneous impression which might be created regarding the standard of classification of Lloyd’s Register for such vessels if the statements referred to remain uncontradicted.”

A pithy riposte indeed. As Andrew Scott points out, we were not involved in classing the Titanic, however we did approve her anchors which still lie intact on the seabed of the North Atlantic Ocean. We also classed the passenger liner Carpathia which arrived to assist the sinking ship a few hours later, saving 705 men, women and children from the Titanic’s lifeboats.

The tragedy with its disturbing death toll of 1,523 had an important sequel. In 1914, the impact of several inquiries in the UK and USA led to the set ting up of the fir st International Convention for the Safety of Life at Sea (SOLAS), its aim to improve maritime safety and help prevent any future catastrophes.

SOLAS’s principles – robust lifesaving appliances and lifeboats, improved vessel design and equipment, better fire protection, effective satellite communications, rescue planes and helicopters and properly trained personnel – have been the major safety code for the global marine industry ever since.

Christopher Brown edits HORIZONs magazine, a quarterly publication by the UK-based classification society, Lloyd’s Register. Mr. Browne’s accolades include: Winner of the 2006 Consumer Broadsheet Journalist of the Year in the BIBA Awards; nominated in 2007; shortlisted for journalism’s Oscars, the British Press Awards; nominated four times for the IBP Journalism awards.