Erik.Ranheim@intertanko.com
Manager Research and Projects
Value for money
Amsterdam 27 October 2004
1
INTERTANKO providing
Value for money
For the Industry
Higher newbuilding standards
Performance standards for coating
Permanent Means of Access
Protection of bunker tanks
Tank Level and Pressure Monitoring (TLPM) devices
Ballast Water exchange
Reduced number of inspections
Avoided responsibility for Salvage and Fire fighting in the US
Simplified Voyage Data Recorders (S-VDRs)
For individual and group of members
2
Value for money - industry
Higher newbuilding standards
Common rules for new building will create of a more level playing field
which will eventually make it difficult for sub-standard owners to
operate and the serious owners will to a less extent have to compete
with “minimum cost owners”. Common rules will also reduce the
relative price for high quality tankers as these become the standard.
Assumptions
Higher common rules increase steel weight by 3%
Steelweight of 15,000 tonnes for an Aframax
Steel price of $500 per ton will mean $225,000 increase
Assumed extra welding and other work , $ 0.5 m.
Value for the industry
Quality owners will pay less that one million dollars extra to build
a robust high quality ships instead of paying several million dollars
for own specification above minimum standards
3
Value for money- industry
Performance standards for coating
INTERTANKO push to obtain performance standards for
coating tankers and that it becomes a standard to coat the top and
bottom of cargo tanks of new buildings.
Standard coating will remove the extra costs for owners that
want high specifications
Professional coating application and the adoption of a "coating
life" parameter will save large maintenance and repair costs
Value for the industry:
The saving of one coating and reduced repairs and maintenance
can easily amount to $5
m dollars during a tankers lifetime
4
Value for money - industry
Permanent Means of Access (PMA)
INTERTANKO played a decisive role in the
industry’s effort to obtain an "emergency
amendment of the rule"
INTERTANKO ensured professional contribution
to avoid unsafe and impracticable Permanent Means
of Access
Value for the industry:
The saving for expanded stringers, extra ladders, handrails
etc. can easily amount to more than hundred thousands
dollars per tanker. The delivery of 200 tankers per year and
a saving of $0.1m ship will mean annual saving for the
industry of $20 m
5
Value for money - industry
Protection of bunker tanks
INTERTANKO was the ONLY shipowner association at an
early stage that had an interest in the development of bunker
tanker protection. INTERTANKO contributed to a SNAME
study which generated an alternative method to the double hull
(DH) protection envisaged by IMO.
INTERTANKO proposed the methodology which is now
expected to be part of the new IMO regulation.
Value for the industry:
As from August 2007 smaller sized tankers and in particular some
other ship types (for which DH protection of bunker tanks would be
an impracticable and flawed solution) can apply a probabilistic
methodology, which is recognised as an alternative solutions to
obtain bunker tank protection. Making a careful assumption that 50
tankers delivered per year would save half a million, the industry
saving will amount to $25 m.
6
Value for money - Industry
Tank Level and Pressure Monitoring (TLPM) devices
INTERTANKO was heavily involved in the lobbying to avoid
a completely impracticable requirement for TLPM devices.
INTERTANKO proposed the methodology which is now
expected to be part of the USCG regulation.
Value for the industry:
The cost of retrofitting Tank Level and Pressure Monitoring
devices would have amounted to a few thousand dollar per tanker,
but more importantly – there was NO equipment available to
meet the proposed USCG regulations. The industry could,
therefore, have been exposed to unfair detentions and litigations.
Estimated costs for retrofitting could easily be more that $20 m*
for the industry. The liabilities in case of a oil spill through a hull
crack could easily be several times this amount.
* Retrofitting 2000 tankers at $0.1 m per tanker
7
Value for money - Industry
Ballast Water exchange
INTERTANKO has spent extensive resources on details of the Convention and its
associated Guidelines that may cost the industry hundreds of thousands of dollars extra if
interpreted incorrectly by port and flag states. One example relates to the requirement for
ships to exchange ballast water. INTERTANKO has successfully worked to include a caveat
which removes the need for ships to deviate from its intended voyage, this would also
remove the necessity to leave port specifically to exchange ballast water. INTERTANKO
maintains a strong presence at IMO and the associated working groups to avoid that port
states over-throw this caveat using the Guidelines.
Value for the industry:
Ballast Water Exchange will until 2016 be an option for treating ballast water. Cost estimates
based on bunker prices and pumping efficiency vary between $0.3 per and $2.6 per tonne of
ballast water. i.e. this may cost up to $30,000 per exchange on a VLCC using the lower
figure. This is a cost which will have to be absorbed by the entire shipping industry when the
International Convention enters into force.
However, should a vessel for safety reasons, not be able to exchange ballast en route and
without the regulation as currently written, a tanker may have to deviate from its course
purely to exchange ballast water. Noting that some tankers can take up to 3 days to
exchange ballast and a day may easily be added to reach the desired exchange zone. Four
days of demurrage in a normal good market could be some $120,000 for one tanker.
•
A tanker could be required to deviate several times during a year.
A moderate number of
deviations would be 2 per year which with four days of demurrage could amount to $240,000
per year. Assuming that the fleet involved is the tankers in the spot market which could be
half the fleet above 30,000 dwt or some 800 tankers , this would mean that the total value for
the industry would amount to $240,000 x 800 tankers = $192,000,000.
8
Value for money - Industry
Reduced Number of Inspections
INTERTANKO is working close with
parties involved to promote the
exchange of information via SIRE and
to reduced the number of inspections.
Value for the industry:
One inspection at the price of $10,000
less may save the industry of $20 m,
assuming that some 2,000 tankers are
inspected annually.
9
Value for money - Industry
Simplified Voyage Data -Recorders (VDRs)
INTERTANKO’s initiative and involvement
in the IMO group of experts resulted in the
development the low costs Simplified VDR, in
cooperation with members and VDR
manufactures.
Value for the industry.
The cost savings per ship that retrofits an SVDR is in the region of $30,000 per ship. This
amounts to some $ 90 m for the industry.
10
Value for money - - Industry
Retro-fitting Inert Gas System
INTERTANKO’s question of retro-fitting
Inert Gas to all existing chemical tankers and
Annex 1 tankers below 20,000 and 30,000
Value for the industry.
The costs savings per ship by not retro-fitting
IGS is some $1 m per ship. There are
more than 4,000 tankers below 30,000 dwt.
11
Value for money - Industry
Responsibility for salvage and fire fighting :
It was proposed that the tanker industry should
subsidise the US Salvage industry through precontracts (even if there are fewer tanker accidents than for most other
shipping segments)
Value for the industry.
The postponement of a 5 years old pending and
unfair USCG rule saved the industry a great deal of
money. If adopted and implemented, this rule would
cost a similar amount of what members pay for
having a pre-contracted US capability for response
in case of an oil spill. Assuming average precontraction costs of $10,000, and that half the
membership took such a contract, the total costs for
the membership would be $1.1 m.
12
Value for money - Industry
Plus - what would be the increased the costs for:
Increased liability
NO place of refuge
Criminal sanctions
Ignorant politicians and media
INTERTANKO creates most benefits by preventing
costly and impracticable initiatives from developing
13
Value for money – each member
Assists individual members with specific problems
Tug escorts in SF Bay
INTERTANKO was one of the 3 shipowners
association urging Governor Schwarzenegger to veto
the rule. The saving is around 8,000 USD per
chemical tanker per call to S.F. Bay.
Advise on ROBs and other cargo related
problems
Professional advice on cargo related problems have
resulted individual savings of up to USD 50,000+.
Advise on the interpretations phase-out
regulations for SH tankers
has enabled members to timely formulate vital
company strategies and decisions
Advise on bunker problems
such as off specification and poor quality deliveries
has brought about specific savings for members
14
Value for money – each member
Assists individual members with specific problems
Collection of excess agent payments
Up to $ 45,000 was collected for one single owner for one year
Vetting/screening requirements
Assistance and advice on vetting requirements, procedures,
clearance and screening processes - may commercially be
worth millions each year in less off-hire and better flexibility in
the market
Port State Control appeals process
The Appeals process initiated and lobbied by INTERTANKO
was implemented by Paris MoU has resulted in the effective
clearing of a ships record. The commercial value of this could
be worth hundreds of thousands of dollars to the owners who
have successful appeals
Documentary work
Interpretation of charter party clauses can provide members
with valuable arguments in difficult cases
Port information, security ISPS
INTERTANKO provide port costs for the world’s tanker ports
and assistance on security problems in ports
15
16