Technical Ship Operations: A Primer : Technical Ship Operations: A Primer
Presented at
Webb Institute of Naval Architecture
Glen Cove, New York
24 October 2004
Presented by
Peter K. Wallace, ‘93
Outline : Outline Make a few introductory comments.
Review ship types and fleet sizes.
Discuss ships and their operations.
Describe technical operations.
Make a few closing comments.
Shipping has some Impressive Statistics : Shipping has some Impressive Statistics Functions in a global environment very smoothly.
90-95% Operational of total life for typical, well managed ships. The 5-10% of downtime is for planned maintenance.
Ships handle abusive conditions very well.
Imagine a building the size of the Empire State Building moving at 20 miles per hour and enduring regular motions of 35° amplitude combined with impact loads
Focus : Focus For this presentation we will focus on tankers as the case example:
Largest sector of shipping.
Most mature sector.
Most available information.
Generally leads the industry in terms of best practice and regulatory requirements.
Dry bulk, which is similar in operation, is second largest sector
For those entering shipping, other than military, will likely be working with tankers and dry bulk.
Outline : Outline Make a few introductory comments.
Review ship types and fleet sizes.
Discuss ships and their operations.
Describe technical operations.
Make a few closing comments.
Types of Ships : Types of Ships Tankers: Range in size from 2,000 DWT or so to over 500,000 DWT
Crude, clean and dirty petroleum products, chemicals, food products, LNG, LPG, water
Dry Bulk: Range in size from 5,000 DWT or so to 300,000 DWT
Major Bulks: Grain, Iron Ore, Coal
Minor Bulks: Other Agriculture, Cement, Fish Meal, Forest Products, Fertilizers, steel products
Container Ships: Range in size from about 100 TEU to 12,000 TEU
RORO and RO/PAX: Intermodal, passengers, ferries
Passenger and Cruise Ships: Small sector, high profile.
Break bulk: Small ships, common in small ports.
Inland trading ships and barges: Growing sector
Specialized Ships: Include anchor handlers, icebreakers, nuclear, drill ships, heavy lift ships.
Types of Ships : Types of Ships
Various Ships--Tankers : Various Ships--Tankers Aframax LNG ULCC VLCC
Slide10 : Sources: Company Information, US Navy League, Yahoo Finance
World Fleet Breakdown by Number of Ships : World Fleet Breakdown by Number of Ships Source: Shipping Facts
Slide12 : Source: Poten & Partners Approximate Total: 2,500 ships in international trade
Ports--Offshore Buoy : Ports--Offshore Buoy
Outline : Outline Make a few introductory comments.
Review ship types and fleet sizes.
Discuss ships and their operations.
Describe technical operations.
Make a few closing comments.
Major Parties : SHIPOWNER SHIPYARDS INSURERS PILOTS CARGO OWNER CHARTERER PORT
AUTHORITIES &
TERMINALS CLASS
SOCIETIES FLAG STATES Major Parties Owner
Commercial Manager
Technical Manager
Charterer
Insurance (Hull and P&I)
Flag States
Port States
IMO
Class Societies
Financial Institutions
Media
Tanker industry: Responsibility Chain : Tanker industry: Responsibility Chain SHIPOWNER SHIPYARDS INSURERS PILOTS CARGO OWNER CHARTERER PORT
AUTHORITIES &
TERMINALS CLASS
SOCIETIES FLAG STATES
Commercial Chain : Commercial Chain
Governing Bodies : Governing Bodies International Maritime Organization (IMO): UN organization.
Classification Societies (IACS, Class): ABS, LR, DNV and others
Port State: Regulations pertaining to port and country ship is calling.
Flag State: Regulations pertaining to domicile of the vessel--that is the country the ship is flagged under.
NGOs: OCIMF, Intertanko, Intercargo, BIMCO and others.
These organizations form the rules, practices and enforce the same.
Major Operating Codes : Major Operating Codes ISM/ISO: Operating Documentation and Compliance
STCW: Crew Qualifications
MARPOL: Pollution Prevention
SOLAS: Safety and Life Saving
ISPS: Ship and Port Security
There are many others as well.
Characteristics of Shipping--Spill/Emergency Response : Characteristics of Shipping--Spill/Emergency Response Spill/Emergency Response is a result of OPA ’90 and other incidents.
Basic Elements include:
Engineering
Salvage
Media Response
Cleanup
Commercial and Liability Response
Some areas require escort tugs in sensitive areas
Characteristics of Shipping--Media : Characteristics of Shipping--Media Companies becoming more media savvy than ever before.
Media is being courted for commercial, operating, legal and public relations reasons.
Shipping is no longer the closed club that is beyond the site of the public.
Characteristics of Shipping--Classification : Characteristics of Shipping--Classification Purpose: Independent verification of vessel construction and operation
Organizations: Class Societies
Basic Services: Plan Review, Surveys
Enhanced Services: ISM/ISO, CAP/CAS
Additional Services: Planned Maintenance, Spill Response, Additional Analyses
Characteristics of Shipping--Financial Markets : Characteristics of Shipping--Financial Markets Growing number of publicly traded companies.
Mergers and acquisitions have been strong for the past few decades.
Forcing more accountability and transparency.
Shipping is entering age of being an open and accessible industry. Shipping’s operating practices reflect this maturing into modern market dynamics.
Characteristics of Shipping--Insurance : Characteristics of Shipping--Insurance Protection and Indemnity (P&I)—club arrangement (self insurance)
Hull and Machinery—more traditional, but somewhat self insured
Cargo—traditional insurance.
COFR and other large lines: Disaster insurance. Large coverage on small asset base.
Characteristics of Shipping--Flags : Characteristics of Shipping--Flags Flags of Convenience (non-ITF)
Open Registry (ITF—no other restrictions)
National Flag—(tight citizenship/build/trade restrictions)
Paris MOU List shows relative ranking of flag states (US no. 17 behind PRC, Bermuda and Liberia from 2004 list)
Flag State is important for corporate, crewing and trading reasons.
Outline : Outline Make a few introductory comments.
Review ship types and fleet sizes.
Discuss ships and their operations.
Describe technical operations.
Make a few closing comments.
Owners, Operators and Managers : Owners, Operators and Managers Shipowners
Operators
Commercial Managers
Technical Managers
Specialty Managers--Crew Managers
All varieties of operating models are common. Many firms use a variety of models on a case-by-case basis.
Commercial Chain : Commercial Chain Focus on the Technical Management
Short, Medium and Long Term Activities : Short, Medium and Long Term Activities Short Term--Daily Concerns
Daily operations to keep the ship moving.
Medium Term--Occurring in a frame of 3-12 months
Planning, development and closing of various projects, programs or efforts that happen periodically or specific events.
Predominantly foreseeable, but somewhat larger in scope or size than daily operations can realistically handle.
Long Term--Anything beyond 12 months
Business development, long term strategic and tactical efforts.
Typical Short Term Activities : Typical Short Term Activities Arranging crew changes
Arranging crew training
Approving purchase requisitions and placing purchase orders
Coordinating with charterer the details of port calls and voyage characteristics
Coordinating with service technicians, agents or others that are visiting the vessel
Coordinating with suppliers and agents for materials
Occurring within the time frame of the next port call or is otherwise an immediate action item.
Typical Medium Term Activities : Typical Medium Term Activities Preparing for drydockings, Special Survey
Other Maintenance and Repair planning
Establishing or reconfirming purchasing frame contracts
Establishing or reconfirming service contracts
Arranging charter cover for vessels coming off long term charter
Planning for phase in of new regulations and charterer requirements
Execution of acquiring and disposing of vessels
Occurring in a frame of 3-12 months
Typical Long Term Activities : Typical Long Term Activities Market shifts
Crewing contracts
Influence legislation
Influence operating practice
Business Development
Researching and gauging market shifts
Typically strategic and certain tactical activities, including business development, liaison activities, corporate planning and arranging long term contracts.
And almost anything else beyond a 12 month window.
Ports--F(P)SO/FSU : Ports--F(P)SO/FSU
Role of Technical Manager : Role of Technical Manager Technical Manager has concerns of all technical and operational aspects of ship management.
Maintenance and Repair
Crewing
Procurement
Operations
ISM/ISO/Environment and Reporting
Insurance
Engineering
Accounting
Technical Operations : Technical Operations Strategic, Tactical and
Operational Communications
Technical Ship Management--Responsibility Lines : Technical Ship Management--Responsibility Lines Maintenance and Repair
Ensure all maintenance and repair requirements are carried out
Records
Planning for hull and machinery
Coordination with crew, suppliers, technicians, engineering, Class, Flag State and others
Crewing
Arrange crew changes and scheduling
Arrange crew training
Arrange crew documentation
Manage crew payroll with accounting and crewing agents
Technical Ship Management--Responsibility Lines : Technical Ship Management--Responsibility Lines Procurement
Ensure requisitions are complete and accurate
Coordinates with M&R and others
Orders materials
Arranges material deliveries to meet the ship
Coordinates with ship and accounting for payments
Operations
Coordinates with post fixture team (charterer/commercial) for ship routing, including bunker calls.
Coordinates with all departments that have business with ship during voyage and in port.
Coordinates customs, port state agents, vetting inspections and others.
Arranges and coordinates ship agents.
Main point of contact for all outside parties relating to daily operation of the ship.
Technical Ship Management--Responsibility Lines : Technical Ship Management--Responsibility Lines
ISM/ISO/Environment and Reporting
Relatively new department (<10 years)
Coordinates and manages all ISM and ISO documentation, training, audits and reporting.
Coordinates and manages all elements related to environmental and quality records that may or may not be addressed within ISM/ISO.
Coordinates with the myriad of reports required for owners, charterers, vetting organizations and others.
Insurance
Technical ship managers very often only handle Hull and miscellaneous insurance such as crew or professional liability.
Technical ship managers coordinate with Owners and others on P&I claims, cargo insurance, COFRs and other lines directly worked with Owner or Commercial Manager.
Technical Ship Management--Responsibility Lines : Technical Ship Management--Responsibility Lines Engineering
Very often the “Special Projects” group.
Supports all groups, particularly M&R and Executives.
Typically leads new build programs.
Typically leads on major refurbishment or conversion efforts.
Very often involved in business processes and business development.
Accounting
Typically one of the larger departments.
Coordinates flow of monies through the appropriate ships and accounts.
Coordinates cash management.
Handles crew payroll, material and service invoices, and other fees.
Outline : Outline Make a few introductory comments.
Review ship types and fleet sizes.
Discuss ships and their operations.
Describe technical operations.
Make a few closing comments.
Trends in Design and Operation : Trends in Design and Operation Move towards larger containerships. Parcel carriers such as DHL, FedEx and UPS moving into 3PL shipping.
Move towards smaller tankers and more product over crude carriers. Partially influenced by more upstream processing and smaller fields.
Short sea and inland shipping is expected to grow worldwide.
Rapid fleet build of LNG.
More automation--impending crew shortages, particularly of officers
More planned maintenance and monitoring systems.
Movement towards heavier scantlings, IACS Joint Projects underway.
Growing world trade is good for shipping.
Comment on Design : Comment on Design Both were snubbed by the general community:
Icebreaking tankers are currently in vogue.
Return of nuclear in the next decade?
Trends in Regulation : Trends in Regulation Environment--Genesis with Amoco Cadiz and Torrey Canyon
Safety and Quality--Highlighted with Titanic
Accountability--Highlighted with Exxon Valdez
Security is much smaller than overall trends above and has largely been incorporated within operating practice. Still in implementation and refinement stages.
Trends in Regulation--Environmental Regulations : Trends in Regulation--Environmental Regulations MARPOL 73/78 to Segregated Ballast tankes
MARPOL/OPA ‘90 to Double Hull
Clean Air Emissions
Antifouling Coatings
Ballast Water Treatment/Exchange
Enforced by Port States, Flag States very aggressively
Trends in Regulation--Quality and Safety : Trends in Regulation--Quality and Safety Increasing use of and expansion of:
Vetting: Charterer inspection and approval of vessels.
CAP: Condition Assessment Program is based on actual condition of vessel and compares to as-built for structural and machinery items.
Transparency: Corporate commercial and operational responsibility lines clearly defined and documented.
Trends in Regulation--Accountability : Trends in Regulation--Accountability ISM and ISO. Sarbanes-Oxley for publicly traded firms.
COFRs and other large lines of policy coverage.
Aggressive enforcement by Port States and Flag States. Many previous infractions are now criminal where before they were considered minor.
Classification Surveys are increasingly more stringent, particularly from third special onwards.
Strengths of Shipping : Strengths of Shipping Multinational
Mature
Physical
World market with real currency/trading
“When goods don’t cross borders, armies do.”
Weaknesses of Shipping : Weaknesses of Shipping Perceived to be a “Black Art”
Low Returns (volatile and cyclical industry)
High Risk
Large Liability
“The problem is that shipping is like the larger world in which it operates—an inherently disorderly affair, existing mostly beyond the reach of nations and their laws, beyond the dikes and coastal horizons, and out across the open seas. It is not exactly a criminal industry, but it is an amoral and stubbornly anarchic one. And it admits as much about itself…”--William Langewiesche
Recommended Reading : Recommended Reading The Prize, Daniel Yergin and Joseph Stanislaw
Commanding Heights, Daniel Yergin
Maritime Economics, Martin Stopford
The Invisible Billionaire, Jerry Shields
The Shipbreakers (Atlantic Monthly, August 2000), William Langewiesche
The End : The End
Questions?
Peter K. Wallace
e-mail: peter.wallace@knickerbocker-maritime.com
presentation available on www.knickerbocker-maritime.com