[ID] => 10062
[post_author] => 34
[post_date] => 2018-09-11 09:27:45
[post_date_gmt] => 2018-09-11 08:27:45
[post_content] => Placing restrictions on vessels according to age is a crude metric but one that is used by charterers and port state control alike when assessing ship quality. Tankers of more than 20 years of age may be rejected by charterers without any regard to their actual ability to do their job safely and efficiently.
That approach is wrong on a number of counts, says Jan A Hammer, managing director of Essberger Tankers. A stainless steel chemical tanker that has been well designed and well constructed and that has been properly maintained throughout its life can expect to continue to trade safely and efficiently until 25 or even 30 years of age, he says.
But in the face of conflicting restrictions placed on older tankers, Hammer believes a more sensible solution is to set a universal age limit of 25 years; this will encourage owners to invest in building and maintaining good quality vessels and give them the opportunity to trade those vessels to their fullest extent over a predictable lifetime, with benefits not only to owners and charterers but also the environment.
“I do not want to be misunderstood,” Hammer says. “Safety and environmental care are the most important aspects of our business and will never be compromised. I would not have launched my proposal if I did not know that the safety record of some of the chemical companies that are not operating with age restrictions are in fact better than for those that do.”
EXPENSIVE TO BUILD
The business of operating chemical tankers is, Hammer says, inseparable from the business of tank cleaning. Chemical tankers are designed to be able to carry several different cargoes simultaneously – not just liquid chemicals but also vegoils, petroleum products, lube oils and so on – and also to be able to change to other cargoes at every port call, as market conditions and vessel scheduling demands. As a result, chemical tankers are designed to be able to strip their tanks of cargo using deepwell pumps, and to clean the cargo tanks quickly and effectively.
In addition to the necessary pumps and cleaning machines – one for each cargo tank - chemical tankers will normally be equipped with nitrogen generators for tank blanketing, boilers for steam generation, heating coils and vapour return lines. This also means a lot of interlocks and control systems. Add in the cost of the stainless steel cargo tanks and it is clear that a chemical tanker is a very expensive ship to build.
To put this into perspective, a new 6,500-dwt stainless steel chemical tanker will, in today’s market, cost around $20m to $24m. That is much the same as a handysize (37,000 dwt) bulker. A 40,000-dwt ‘super segregator’ stainless steel chemical tanker will cost between $60m and $80m, almost as much as a 350,000-dwt VLCC. In other words, stainless steel chemical tankers cost as much as simpler vessels with a carrying capacity between six and nine times larger.
All this investment needs to be recouped and that has an influence on the expected economic life time (ELT) of the vessel. ELT is usually determined as being the point where the cost of ongoing maintenance outweighs the potential returns from trading. Frequently, the cut-off point coincides with a special survey: classification societies require that vessels undergo a special survey (which includes a drydocking) every five years and such surveys are expensive. As a result, an ageing vessel may well be retired immediately before its fifth special survey (generally at 25 years of age) or sixth special survey (at 30 years).
In the chemical tanker sector, Hammer says, less sophisticated vessels with coated tanks are often retired before they reach the age of 25; the higher cost of stainless steel ships means that owners need to trade them longer and, as a result, make sure they are fitted with all the necessary equipment and are well maintained. In such cases, a 25-year-old ship can, from a safety and quality point of view, perform much better than a younger tanker that was badly constructed and not properly maintained.
Age restrictions are just one issue among many when it comes to charterers’ ‘rules and regulations’, Hammer points out. Such rules, which have proliferated in recent years, may include the vetting and CAP-rating of ships and crew matrices in addition to age restrictions. These come on top of class surveys and audits carried out by the Chemical Distribution Institute (CDI) and by port state control inspectors.
“Commercial operation of chemical tankers is not rocket science but it is still relatively
difficult and certainly requires skilled and experienced people,” says Hammer. “It goes without saying, therefore, that individual or charterer-specific rules and regulations make the running of the business additionally complex.”
What makes life hard is that these additional requirements are often specific to a particular charterer; a vessel that may be perfectly acceptable to one charterer may be unacceptable to another; just taking age restrictions as an example, some charterers demand that vessels are no more than 15 years old, or 20, 23, 25 or whatever.
Hammer believes that the incident that gave impetus to charterers’ view on vessel age was the sinking of the tanker Erika
off the coast of France in 1999. The tanker broke in two, spilling its fuel oil cargo and causing severe pollution of the sea and coastline. Erika
was 25 years old at the time of the incident and, while it later emerged that there were specific problems with the ship, a few charterers quickly introduced a 25-year limit on the vessels they were prepared to employ; that restriction rapidly spread through the industry and, with individual charterers keen to establish their environmental credentials, has been successively tightened.
Not only do shipowners face a range of age restrictions from different customers, those customers also vary their age restrictions depending on a range of aspects, such as the cargo involved, the route and the ports that will be visited, and other factors. All this leads to uncertainty for the owner.
WASTE OF SPACE
The inevitable outcome of this is reduced utilisation of carrying capacity. Given the range of restrictions and the waivers and exemptions that exist, owners cannot schedule their fleets efficiently. They cannot achieve the best cargo combination for each vessel for each voyage, which leads to an unnecessary number of port and berth calls, more time in port, more ballast voyages and empty positioning. That translates directly into inefficient vessel utilisation overall and an environmental footprint that is bigger than necessary.
“Another effect is that lower utilisation obviously means a limitation of supply – fewer ships than those physically capable, are made available to compete for specific cargoes, the result being higher freight rates and cost of transport than would otherwise have been the case,” Hammer says.
The intentions of charterers in imposing age restrictions are good: to reduce the number of incidents and improve safety. But do they do that? There is no evidence to suggest they do. Most incidents on tankers – 90 per cent is a proportion widely quoted – are due to human error, either aboard the ship or in shoreside functions. There are no figures that demonstrate any correlation between tanker incidents and vessel age.
Moreover, if owners are uncertain about the long-term trading potential of their ships, are they going to be willing to put in the necessary investment at the newbuilding stage, and to continue to maintain those ships effectively? Some owners have already been complaining that the business is not sustainable as things stand.
RETURN ON INVESTMENT
Shipowners, like any other business, make investment decisions on the basis of an expected return. If a chemical tanker owner wants to build new ships, it will likely be on the basis of an expected return over the 25 years of useful life of those ships; if charterers’ age restrictions mean that the lifetime is only 20 years, that investment does not pay off.
The rational response to that is to base the initial investment on a 20-year lifetime; that inevitably means a compromising on building specifications and expenditure on maintenance over the life of the ship. The result is obvious: a vessel of poorer quality, which is not good for safety. “I would say, in fact, that a low-quality ship built for 20 years is potentially a higher risk than a high-quality ship built for the optimal economic lifetime,” Hammer says. In addition, this response increases the industry’s environmental footprint and means that ships will go for demolition with components that could last for many more years.
This, in effect, resembles a ‘buy-and-throw-away’ culture but, as Hammer says, “Is that what the world expects of us today?”
More than that, cheaper ships generally have a lower degree of automation, which can lead to more personal injuries among the crew and make the vessels less attractive. This makes it harder for operators to recruit and retain high quality crew.
One suggestion has been that older vessels could simply be moved to so-called ‘secondary’ trades. This seems to mean deploying them in low-grade cargoes (bunkers, fuel oil, etc) and/or in areas where safety is believed to be less of an issue. That is hardly an ethical approach. “Shouldn’t the safety and quality of transport be equally Important for everyone involved, in all parts of the world?” Hammer asks. “Don’t we all want to bring the world towards a common safety and quality standard?”
HERE’S AN IDEA
Hammer has a suggestion to rectify the problem. As he says: “The safest solution is by contributing to bringing the chemical tanker industry towards common rules and regulations, including a maximum age limitation of 25 years for stainless steel chemical tankers.”
If charterers could agree (or be made to agree) that they will accept quality vessels up to the age of 25 years, that would remove the uncertainties faced by operators in the deployment of their fleet. It would also give owners the confidence to invest in high quality ships and maintain them to the standards required. “An age restriction at this particular milestone is something owners and operators easily can plan for and live with,” Hammer concludes.
[post_title] => Chemships: Age cannot wither her
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[post_name] => chemships-age-cannot-wither
[post_modified] => 2018-09-11 09:27:45
[post_modified_gmt] => 2018-09-11 08:27:45
[post_parent] => 0
[guid] => https://www.hcblive.com/?p=10062
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