Surviving in crises How to survive when freight rates do not cover costs ? How to maintain high quality shipping with a low number of incidents and few oil spills at the same time as earnings are low and pressure to reduce cost is high ? How to fend off the pirates ? $/day Why risk management is important !!
World GDP and oil demand change Source. IMF/BP / IEA
Average tanker freight rates based on the Baltic rates Source: Baltic Exchange/INTERTANKO $/day
World oil demand mbd Source. IEA Increase in Middle East, USA, China and ROW** 1Q07-4Q10 mbd ROW**. Rest of World
Tanker deliveries, removals, max phase-out All tankers > 25,000 dwt m dwt Assumed balanced market end 2008 Deliveries and orderbook based on Clarkson World Shipyard Monitor Sept 09 6 m dwt additional annual delivers 2013 -2015, and Phase out all SH by 2010, DB/DS trading until 25 years old 2 m dwt additional annual scrapping of DH 2011-2015 Fleet 527 403.4 m dwt Orderb 228 121.8 “ 45% Not DH 626 50.2 ” 12% 2009 2% reduction demand
Oil demand, tonne-mile, and tanker fleet, development mbd Source: IEA, Fearnleys, INTERTANKO Tanker fleet increase 2002-2010: 43%
Accidental oil pollution into the sea spills per tonne-miles 1970-1980 Source: INTERTANKO/ITOPF 1000 ts spilt per bn tonne miles No major spill until Sept. 2009 Record low 2008
Accidental oil pollution into the sea 1970-2009 Source: INTERTANKO/ITOPF 1000 ts spilt No major spill Jan-Sept. 2009 Record low 2008 Largest spills in each year: 2004 - 2008
Number spills above 7-700 tonnes Source: INTERTANKO/ITOPF Number Record low 2008
Number spills above 700 tonnes Source: INTERTANKO/ITOPF Number Record low 2008 No major spill until Aug 2009
Accidental oil pollution into the sea and tanker trade Source: INTERTANKO/ITOPF/Fearnleys 1000 ts spilt bn tonne-miles Record low accidental pollution from tanker in 2008, no major ones so far 2009
Incidents attended by ITOPF over the past 5 years Number Source: ITOPF
Tanker incidents 2009 Rate is number incidents divided by number tankers in the segment Worst incident 2009 may be collision/fire Formosa Brick collision in the Straits of Singapore Aug 2009 9 fatalities and Elli that broke in two at the entrance Suez Canal.
Tanker incidents and accidental pollution Number incidents ’ 000 ts pollution Source: INTERTANKO, based on data from LMIU, ITOPF + others 2009 a projection based on 9.7 months Record low accidental pollution from tanker in 2008, no major ones so far 2009
Tanker incidents by type % of total Source: INTERTANKO, based on data from LMIU, ITOPF + others 2009 a projection based on 9.7 months
Tanker hull & machinery incidents Number incidents Based on data from LMIU, ITOPF + others
Tanker hull & machinery incidents Number incidents Based on data from LMIU, ITOPF + others 15.8 259 38 133 88 Total 16.3 38 8 17 13 2009 15.6 59 10 24 25 2008 13.2 48 3 25 20 2007 14.3 32 3 17 12 2006 17.6 34 5 20 9 2005 18.8 12 3 7 2 2004 18.4 14 3 8 3 2003 17.5 22 3 15 4 2002 Average age Total >25 years 10-24 years <10 years Year
Tanker incidents and rate by flag Number incidents Rate 2008 – 287 incidents Flags with more than 2 incidents Flags with more than 1 incident Rate is number of incidents divided by number of ships per flag 2009 9.7 ms – 227 incidents Canada 0.194 Cambodia 0.091 Cambodia 0.091 Russia 0.047
Tanker accidental pollution 1974 – 2009 by cause (9,368 incidents) Based on data from ITOPF
Tanker accidental pollution 1974 – 2009 by cause Based on data from ITOPF Tankers spills of 7 - 700 tonnes Tankers spills of > 700 tonnes Tankers spills of < 7 tonnes 7817 spills 1203 spills 348 spills Operational Collision Fire & explosions Groundings Hull failures Other/unknown
Balancing risk & reward to arrive at the best business decision
To protect people, the environment and property
To avoid involvement in a catastrophic incident
To prevent business disruptions
To improve quality of available tonnage .
Elli was split in half and sank near the Red Sea entrance to the Suez Canal, 80 miles east of Kairo, Egypt, Friday Aug. 28, 2009.
Flirting with disaster Why accidents are rarely accidental
Short term thinking about money is a factor in many incidents
While the most common explanation of accidents are operator error, a more frequent cause is faulty design of the socio-technical system (i.e. people and tech. in combination) in which the operator is embedded.
Without an institutional recognition of risk , an emphasize on safety is unlikely, and in the absence of focus on safety, it is impossible to achieve it
Disasters – uncontrollable domino effect in a interdependent system- hazards expand faster than people are able to cope - OBE*
Disasters are often foreseen, and warned but not strong enough
Be aware - Improving safety also encourage risk taking
The Intertanko initiative is a laudable effort on part of the industry to raise bar on competence and training
This is particularly applicable for effective task based and structured training for Junior officers
This will assist in preparing the officers for promotion when acquiring competence in listed tasks
The effectiveness of any program is in the effectiveness of implementation, resources, auditing and quality control
Given the listed items for effective implementation of TOTS, would the officers achieve any tangible advantage in time vs. the present experience requirements? A good question to be answered by results
Human learning is 70% based on EXPERIENCE (Skills and application of knowledge)
Serious current manning flaws include , lack of experience, mixed culture/nationalities, communication (language) problems, poor knowledge