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2012International Chamber of Shipping Representing the Global Shipping Industry
We acknowledge with thanks the use of photos from the following associations and their member shipping companies:
ANAVE, Spain BW Shipping, Singapore Canadian Shipowners’ AssociationChamber of Shipping of AmericaChina Ocean Going (Group) Co Confitarma, ItalyCyprus Shipping ChamberDanish Shipowners’ AssociationFinnish Shipowners’ AssociationHong Kong Shipowners’ AssociationInterferryIrish Chamber of ShippingJapanese Shipowners’ AssociationRoyal Association of Netherlands ShipownersSwedish Shipowners’ AssociationTurkish Chamber of ShippingUnion of Greek ShipownersVerband Deutscher Reeder, Germany
AnnualReview2012
Representing the Global Shipping Industry
ICS (the International Chamber of Shipping) is the principal international trade association for shipowners, concerned with all regulatory, operational and legal issues. ISF (the International Shipping Federation) is the identity used by ICS when representing the industry on employment affairs issues. The membership of ICS (and ISF) comprises national shipowners’ associations representing all sectors and trades from 36 countries, covering more than 80% of the world merchant fleet.
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page Contents 4 Chairman’sOverview 5 OfficeBearersandSecretariat
6 KeyIssuesin2012 6 The‘CostaConcordia’Disaster 8 ThePiracyCrisisContinues 10 NavigatingthePoliticsofClimateChange
15 TheYearinReview 15 LowSulphurFuel 16 BallastWaterManagement 17 ChangestoMARPOL 18 ShipRecycling 18 ShipbuildingStandards 19 CargoSafety 21 TankerSafety 22 MalaccaandSingaporeStraits 24 E-NavigationandECDIS 24 TrainingStandards 27 WorkHourRegulations 27 EmploymentRelations 29 MaritimeLabourStandards 30 ILOMinimumWage
page
31 AsianDevelopments 32 EUDevelopments 34 USDevelopments 34 TradeSanctions 38 LLMCIncreases 39 PassengerShipLiability 40 EnvironmentalSalvageAwards 41 RotterdamRules 42 CompetitionIssues 44 InvestigationofIGofP&IClubs 45 FlagStatePerformance 45 ShippingPolicyandFreeTrade 46 ShipbuildingPolicy 49 CanalIssues 50 IndustryRepresentationandCo-operation 52 Publications 54 OrganisationalMatters 55 ICSBoardofDirectors 56 CommitteeStructure Membership
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ICSChairman,SpyrosMPolemisGreece
THISICSANNUALREVIEWprovidesagoodopportunitytotakestockofeventsduringthelast12monthsthatmayhelptoshapethefuturedirectionofourgreatindustry,andofsomeofthemajorchallengesthatlieahead.Sadly,thiswillbethelastoccasiononwhichIprovidetheopeningremarkstothiscomprehensivereviewofICS’sactivitiesonbehalfoftheglobalshippingindustry.TheinfluencethatICSbringstobearonmaritimeregulatoryaffairsisconsiderable;somethingwhich-despitethehugepoliticalandtechnicalcomplexitiesinvolved-ICSdoeswithconsiderablesuccess,butwithcharacteristicallyquietefficiency.
However,inaworldofmassmedia,andwithaplethoraofdifferentinterestgroupsvyingforattention,falsemodestyisnolongerseenasavirtue.Therefore,assoonasIcametoappreciatetheremarkablebreadthofICS’sactivities,thedepthofitsexpertiseandtherespectwhichitenjoysamongstgovernmentsworldwide,oneofmytasksasChairmanhasbeentotrytoincreaseunderstandingandawarenessofICS’svitalrolewithintheshippingindustryatlarge.IhopethatthisexpandedICSAnnualReviewwillcontributetothattask.Likemostthingsinlifewhichwetakeforgranted,theserviceprovidedbyICSissomethingthattheindustrywouldfindveryhardindeedtodowithout.
ICS,itsmembernationalshipowners’associationsandtheindustrywhichtheyrepresenthavewitnessedagreatdealofchangesinceIwasfirstelectedChairmansixyearsago,againstabackdropofboomingshippingmarketswhichthenplungedintodeeprecession,aswellasmajorchallengesontheregulatoryfront.
Thelattersometimesplacedstrainonthemaintenanceoftheglobalregulatoryframeworkonwhichtheshippingindustrydependstooperateefficiently.Iamverypleasedtoreportthatthisframework,underpinnedbyIMOConventions,remainsfirmlyintactandisstillstronglysupportedworldwide,bygovernmentsandindustryalike.Buttherecontinuestobeaneedtobevigilantagainstunilateralorregionalregulation,notleastwithrespecttomeasurestoaddressshipping’sCO2emissions.DuringmytenureatICS,wehaveseentheadoptionofaradicalIMOagreementthatwilldramaticallyreduceairpollutionand,inJuly2011,thefirsteverglobalagreementcoveringanentireindustrialsectorthatwillensurethatshippingreducesitsCO2emissionsby20%pertonne/kmby2020,withfurthersignificantimprovementsinenergyefficiencygoingforward.Withrespecttothesafetyandwelfareoftheseafarersthatweemploy,andonwhomtheworlddependsfortheefficienttransportationof90%ofworldtrade,wehaveseenmajoradjustmentstotheInternationalSafetyManagement(ISM)CodeandtheIMOSTCWregimegoverningtrainingstandards,aswellastheadoptionoftheILOMaritimeLabourConvention.Thisisinadditiontotheincrementalbutnumerouschangestodetailedregulationsgoverningshipconstructionandequipment,maritimelawandinsurance,andthesmoothoperationofshippingmarkets,whichallhelptoensurethatshippingremainssafe,cleanandremarkablyefficient.TheseareallimportantdevelopmentsinwhichICS,anditsmembers,haveplayedacrucialpart,helpingtoensurethatthebestinterestsoftheindustryandsociety
arereconciledsofaraspossibleinasoundandpracticalmanner.
AsthisAnnualReviewmakesclear,thenextfewyearswillbeverydifficult,withglobaleconomicuncertainty,achronicoversupplyoftonnage,andtrulyenormouscostpressures,notleastwithrespecttobunkers,aswemovetowardsburninglowsulphurfuel.Shipownersalsofacetheprospectofbeingchargedbillionsofdollarsperyearforcarbonemissions,despitebeingbyfarthemostenergyefficientmodeofcommercialtransport.Newrequirementsforballastwatermanagementalsopresentaseriouschallenge,withrespecttoboththeirtechnicalandeconomicviability.
Ofmoreimmediateconcern,shipownersandtheircrewscontinuetofacethewhollyunacceptablescourgeofpiracy,offthecoastofSomaliaandelsewhere.IhavesaiditbeforeandIwillsayitagain,itreallyistimefortheinternationalcommunitytomakeitclear,andforgovernmentstounderstand,thatcriminalattacksagainstinternationalshippingcannotandwillnotbetolerated.
Meanwhile,thedangersofcomplacencywithrespecttotheindustry’sotherwisegenerallyexcellentsafetyrecordhavebeenputintothespotlightbythe‘CostaConcordia’tragedyandotherrecentaccidentsthatwillinevitablyresultwitharobustresponsefromtheregulators.Itmustbehopedthatthisresponsewillbemeasuredandbasedonathoroughanalysisofthefacts,aswellasaproperdebateaboutthetechnicalmeritsofargumentsforanyproposedchangestorulesorprocedures.ICSwillofcoursecontributeactivelytothisdebateintheyearahead.
Chairman’sOverview
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IamverypleasedthatmylastfewmonthsinofficehavecoincidedwiththeappointmentofMrKojiSekimizuasthenewSecretary-GeneralofIMO.Iamespeciallypleasedthat,whilstsharingICS’sultimategoalofzeroaccidentsandzeroimpactfromshippingontheenvironment,hetoobelievesthatmoreshouldbedonetoexplaintheimpressiveperformanceoftheindustrytoitsinternationalregulators,topoliticiansandtohighlevelpolicymakers.ICSlooksforwardtoparticipatingalongsideIMOatthe‘Rio+20’UnitedNationsSummitonSustainableDevelopmentinJune2012.IthastrulybeenapleasuretoserveastheChairmanofICS,aswellasagreatresponsibility.Ihaveverymuchenjoyedmycontactwiththemembernationalassociations,andImustexpressmydeepappreciationtotheICSBoardofDirectors,andtothosewhocontributewithsuchdedicationtothevitalworkofICS’sexpertcommitteeswhichproduceICSpolicypositionsanddevelopinvaluableguidanceonindustrybestpractice.Iwishmysuccessorwell,andIamveryconfidentthatunderhisleadershipICSwillcontinuetoservethebestinterestsofourindustryinthehighlyconsideredandprofessionalmannertowhichwehavebecomesoaccustomed.SpyrosMPolemisChairman
MrFrankLeonhardtGermany
ICSViceChairman2011/12
MrGerardoBorromeoPhilippines
MrTrygveSeglemNorway
CaptainDirkFryCyprus
SecretariatMrPeterHinchliffeSecretary General
*positionheldjointly
MrSimonBennettDirectorExternalRelationsMsLindaHowlettDirectorLegalAffairs*MsKiranKhoslaDirectorLegalAffairs*MissCamillaAranaPolicyOfficerMrPhillipBinksAdviserMrAlistairHullTechnicalManager
MrsSusanGrayDirectorFinanceandAdministrationMrsKathrynHallPersonalAssistanttoSecretaryGeneralMrsCatherineHowlettAdministratorPublications
MrJohnMurrayDirectorMarineMrsNatalieShawDirectorEmploymentAffairsMrDavidTongueDirectorRegulatoryAffairsMrJamesLangleySeniorAdviserMissEmilyRowleyAdviserMrJohnStawpertSeniorAdviser
MrsShantelRyanPublicationsManagerMrsAnitaPowAdministratorShippingPolicyMissJulieRogersAdministratorMarineDepartment
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The‘CostaConcordia’Disaster
a‘stateoftheart’vesselmannedbyahighlyqualifiedcrewwhowereusingthelatestnavigationalequipment.
On13January2012,inthefullglareoftheworld’smedia,thecruiseship‘CostaConcordia’groundedandcapsizedoffthecoastofItalywithover4,000peopleonboard.Tragically,atleast30liveswerelost.Thisseriousmaritimecasualtyappearstohavebeenatextbookcaseofanaccidentthatshouldneverhavehappened,madeallthemorepoignantbythe100thanniversaryofthesinkingofthe‘Titanic’withwhichcomparisonshaveinevitablyiferroneouslybeenmade.Thatsaid,questionsarebeingaskedaboutwhatmighthaveoccurredhadasimilarincidenttakenplaceatamoreremotelocationawayfromsophisticatedsearchandrescueservices.
TheItaliancruiseshipstruckrocksin
EVERYONEINSHIPPINGrecognisestheneedtobepreparedfortheunexpected.Whatwasnotforeseenwasthatthedefiningeventof2012wouldbethetragiclossofthe‘CostaConcordia’andthatthesafetyrecordoftheindustrywouldbeputunderthespotlightinthemostdramaticwayimaginable.Thishighprofiledisastermayalsohaveimplicationsforothertypesofshipbeyondthecruisesector,anditwillalmostcertainlyhaveasignificantinfluenceontheimmediateregulatoryagendaatIMO.
Safetyoflifeatseamustalwaysremainthehighestpriorityandthewayinwhichtheindustryaddressesanyissuesraisedbythismajoraccidentmayreflectonitsreputationforyearstocome.Itwillbevitalfortheindustrytounderstandthesequenceofeventsthatledtothedisaster,whichinvolved
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KEY ISSUES IN 2012
theTyrrhenianSeajustofftheeasternshoreofIsoladelGiglio,withmediareportssuggestingthatthevesselcametooclosetotheislandinwhatarewellchartedwaters.Itseemstheimpactrippedanenormousgashontheportsideofthehull,floodingpartsoftheengineroomandcausinglossofpowertopropulsionandelectricalsystems.Withwaterfloodingin,theshipreachedtheislandseveralhourslater,whereitgroundedinshallowwaterwithmostofthestarboardsideunderwater.
WithICSsupport,theCruiseLinesInternationalAssociation(CLIA)andtheEuropeanCruiseCouncil(ECC)ledtheimmediatesector-specificpublicrelationsresponse.Moreimportantly,CLIAmembershavebeenconductingarootandbranchreviewoftheirsafetyandoperationalprocedures.However,ICSwillbecloselyinvolvedintheinevitable
regulatorydiscussionsatIMO,aswellasintheEuropeanUnionandtheUnitedStates.TheEuropeanCommissionhasalreadyannouncedthatitwilllaunchapublicconsultationandlegislativereviewduringthecourseof2012whiletheUSCongressisconductingitsownhearingsgiventhatalargeproportionofcruiseshippassengersareUSnationals.
ItishopedthattheItaliangovernmentwillpresenttheresultsofitspreliminaryinvestigationsforconsiderationbytheIMOMaritimeSafetyCommitteeassoonaspossible,althoughitstaskiscomplicatedbecausethedisasterissubjecttoacriminalinvestigation.Whileitisstillfartooearlytoknowwhattheoutcomeoftheaccidentinvestigationwillbe,questionsraisedbythemediasuggestthataswellasnavigationalissuesandemergencyprocedures,stabilityissuesmaycome
underfurtherscrutiny.Thedebateaboutthelargesizeofmoderncruiseships,andarrangementsconcerninginsuranceforliabilities,arealsolikelytobegivenrenewedattention.ProposalstoreviewtheproperapplicationoftheIMOInternationalSafetyManagement(ISMCode)arealsoanticipated.
Forthemomentatleastitseemsthatpoliticiansandregulatorsarecommendablyrefrainingfromknee-jerkresponsesuntilthecausesoftheaccidentarefullyunderstood.However,thisapproachmayyetchangeduringtheyearaheadasmorefactsaboutthisunfortunateincidentarereleasedandthecriminalproceedingsinItalyreceivefurthercloseattentionacrossthemedia.
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ITISIMPORTANTtorecallthatthecontinuingcrisisintheIndianOceanandattacksagainstshippingbySomalipirateshavealreadyledtoover60seafarerslosingtheirlivesandover4,000seafarersbeingtakenhostage.PiracyhasalsobeenestimatedtocosttheglobaleconomybillionsofdollarsayearandiscausinguntolddamagetotheeconomiesofAfricaandtheMiddleEast.Buttheprincipalconcernofshipoperatorsishumanitarian.Itissimplyunacceptablethatsomanyseafarershavebeenkilled,whilehundredsmorearestillbeingheldcaptiveinappallingconditions.Thousandsofseafarersstillhavetotraversethedangerareainseriousfearfortheirlives,andthestrainontheirfamiliesmustalsonotbeforgotten.
Notwithstandingthesuccessofcurrentmilitarydeployments,thereisstillapressingneedforthegovernmentsofthosenationswiththelargestmilitarynaviesintheregiontoincreaseresourcesavailabletotheextentthatisnecessarytohaveagamechangingimpact.Inco-operationwiththerestoftheindustry,includingthoseorganisationssupportingtheexcellent‘SaveOurSeafarers’campaign,ICSiscommittedtohelpingensurethattheproblemofpiracyretainssufficientpoliticalandpublicattention,sothatthecrisismightbeproperlyanddecisivelyaddressedduring2012.
SomepressreportsmayhavegiventheimpressionthatthelevelofpiracyoffSomaliaisdecreasing.Butasdatafromthemilitarymakesclear,piratecapabilityisactuallyhigherthanever.However,counter-piracyworkintermsofcompliancewiththeBestManagementPracticesdevelopedbytheindustryinco-operationwithnavies(anupdatedversion–BMP4–wasissuedinOctober2011)andsustainedmilitary
interventionwithamoreaggressivestancehasreducedthepirates’rateofsuccess.Thankfully,thenumberofcrewheldinSomaliaisalsoatalowerlevelthanhasbeenthecaseforsometime,withabout200seafarerscurrentlyincaptivity,althoughitmustbestressedthatthissituationisstilltotallyunacceptable.
InFebruary2012,thePrimeMinisteroftheUnitedKingdomhostedamajorintergovernmentalconferenceonSomalia.ICSwelcomedthecommitmentsmadetotrytorestoregovernmentandcivilsocietyinthisconflictriddencountry,theabsenceofafunctioningstatebeingoneoftheunderlyingcausesofviolentSomalipirateattacks.However,addressingtheseissueswilltakeyearsifnotdecadesandtheConferencedidnotappeartoresultinanyfirmpoliticalcommitment,ornewaction,toeliminateorsignificantlyreducethescourgeofSomalipiracyintheimmediatefuture.
ICSbelievesthatgovernmentsmusttasktheirmilitaryforcestotaketheattacktothepiratesandensurethatthemilitaryassetsrequiredtodothisaremaintainedintheatresothattheycancontinuetodefendmerchantshipsinthebestwaypossible.Encouragingly,inMarch2012,EUgovernmentssignalledthattheymaybemovinginthisdirection,andextendedthemandateofOperationAtalantauntil2014.HoweverlittlementionwasmadeattheFebruaryConferenceoftheobligationsofgovernmentsundertheUnitedNationsConventionontheLawoftheSeatoprotectmerchantshipsandtheircrewsfrompiracy,andthefearpersiststhatthecurrentlevelofpirateattacksissomethingwhichgovernmentsmightbewillingtocontinuetotolerate
becauseshipsareoutofsightandoutofmind.
Governmentabdicationofresponsibilityforshipsecuritytoprivatearmedguards,towhomshippingcompaniesarenowresortinginincreasingnumbers,isnotaviablelongtermsolutionforeliminatingpiracy.However,becauseoftheirgrowinguse,ICSisnowpressingIMO,andtheInternationalContactGroupworkingundertheauspicesoftheUN,togiveurgentconsiderationtotheregulationofarmedguardsandthecriteriaagainstwhichtheymightbevetted.TheGUARDCONcontractlaunchedbyBIMCOisaveryhelpfultool,butitdoesnotaddresseverylegalproblemtowhichshippingcompaniesandMastersmightpotentiallybeexposed.
AnotherkeyobjectiveofICSistoensurethateverycapturedpirateissenttotrial.Counter-piracyeffortshavebeengreatlydiscreditedbythelackofappropriatedomesticlegislationinmanynations,includinganyoffenceof‘intenttocommitpiracy’.ThishasledtoacontinuationoftheabsurdsituationwherebypirateswhoarecapturedbynaviesaresometimesreleasedbacktoSomalia.ICShasthereforewelcomedthefocusoftheFebruaryConferenceontheneedforapprehendedpiratestobearrested,takentoacourtoflawand,iffoundguilty,imprisoned,includingtheannouncementtoestablishanewRegionalAnti-PiracyProsecutionsIntelligenceCo-ordinationCentrebasedintheSeychelles.
ICShasalsowelcomedthedeterminationofgovernmentstobreakthefinancialchainthroughlegalactionagainstcriminalfinanciersinvestinginpiracywhereverintheworldthey
ThePiracyCrisisContinues
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KEY ISSUES IN 2012
areidentified.However,theshippingindustrywouldbedeeplyconcernedbyanysuggestionthatthepaymentofransoms,inordertosecurethereleaseofseafarersbeingheldhostage,shouldbeprohibitedorsomehowcriminalised.TheUKForeignOfficehasadvisedthatthisisnottheintentionbehindanewinternationaltaskforceonpiratefinancingthatisbeingestablishedin2012.However,thepossibilityofbanningransomshasreceivedconsiderablemediaattentionandsometimesunhelpfulcommentfromseniorpoliticianswhoshouldperhapsbemoremindfulofunintendedconsequences.
Intheeventthatseafarersaretakenhostage,theinabilityoftheinternationalcommunitytoeliminatepiracyortorescuehostagesmeansthatshipownershavenooptionbuttopayransoms.Thealternativewouldbeforshipownerstoabandon
theircrewstomonthsifnotyearsofappallingtreatment.Thisincludestortureandmurder,whichhasalreadybeentheresultwhenransomshavenotbeenpaid.Intheeventthatransompaymentswereprohibitedorcriminalised,manyseafarersandshippingcompanieswouldunderstandablyrefusetosailintheaffecteddangerarea,withsignificantimplicationsforthelargeproportionofworldtrade,includingabout40%oftheworld’soilshipments,whichistransportedviatheWesternIndianOcean.
Toreiterate,theprimaryconcernoftheindustryishumanitarian,andshipownershaveadutyofcaretotheircrewsandtheirfamilies.MentionmustthereforebemadeoftheimportantworkoftheMaritimePiracyHumanitarianResponseInitiative,towhichICShascontributed,thathascompiledgoodpracticeguidelines
forshippingcompaniesandmanningagenciestohelpsupportseafarersandtheirfamiliesaffectedbypirateattacks.
FindingasolutiontopiracyremainsaclearpriorityforICS,whichnowfindsitselfparticipatinginnumerousmeetingsatIMOandthevariousworkinggroupssetupbytheInternationalContactGrouponPiracyofftheCoastofSomalia.Whileallthesemeetings,inLondon,NewYorkandelsewhere,aretakingimportantdecisionswithrespecttodetailedfacetsoftheproblem,theyareperhapssymptomaticofthefactthatconsiderationofpiracyisbecominginstitutionalisedandthatgovernmentsmaystillbesidesteppingtherealissueofhowtotacklethepiratesmilitarily.Thetimehassurelycomeforaclearmessagefromtheinternationalcommunityofzerotoleranceofpiracyacrosstheglobe.
Year 2009 2010 2011
Pirate Attacks 117 127 151Disruptions 14 64 27Piratings 46 47 25
Source:EUNAVFOR
INJULY2011,150ormoreIMOMemberStatesconcludedagroundbreakingagreementtoreducetheshippingindustry’sCO2emissions.Thisisthefirstsuchglobalagreementforanentireindustrialsector.AsaresultofamendmentstotheMARPOLConvention,newshipswillhavetobebuiltwithanEnergyEfficiencyDesignIndex(EEDI),whilefrom2013allships,includingexistingships,willhavetoutiliseaShipEnergyEfficiencyManagementPlan(SEEMP)inordertocontrolfuelconsumptionandreduceemissions.
AsaresultofthisIMOagreementontechnicalandoperationalmeasures,andthestepsthatshipoperatorsarealreadytakingtoreducefuelconsumption,ICSisconfidentthatshippingcandelivera20%reductioninemissionspertonne/kmby2020acrosstheentireglobalindustry.
ObjectiveobserversmightbeforgivenforthinkingthatthisIMOagreementisaveryimpressiveachievement,especiallyasshippingisalready,byfar,themostenergyefficientformofcommercialtransport.However,anumberofgovernmentsstillexpectmuchmore.InthecontextofthenewGreenClimateFundthatwasestablishedbythemostrecentUnitedNationsClimateChangeConference,somegovernmentshaveactuallyproposedthatshippingshouldpayasmuchasUS$40billionperyearfortheprivilegeoftransporting90%oftheworld’strade.
TheIMOagreementontechnicalandoperationalmeasuresenjoysthefullsupportoftheshippingindustry.ICShasrecommendedthatallnewshipscurrentlycoveredbytheregulationsaredeliveredwithanEEDI,eventhoughflexibility
Navigating thePoliticsofClimateChange
existstoapplyforflagstatewaivers.ReducingCO2emissionsthroughreducingfuelconsumptionisamatterofenlightenedselfinterestforshipoperators,andtheindustryisfullyengagedinthecontinuingdiscussionsatIMOaboutrefiningtheEEDIandextendingittoshiptypesforwhichEEDIformulaehavenotyetbeenfinalisedduetothemoreproblematicnatureofthecalculations.
Aboveall,theIMOagreementisstronglysupportedbyshipownersbecauseoftheoverridingneedforglobalrulesforaglobalindustry.Ifdifferentrulesweretoapplytoshipsatdifferentendsofavoyagetherewouldbechaos,inefficiencyandseriousmarketdistortion.Aregionalapproachtoreducingships’emissionswouldalsobefarlesseffectiveinactuallyreducingCO2.Climatechange,ofcourse,isaglobalchallenge.
Notwithstandingtheconsiderableeffortsbeingmadetoreduceshipemissionsthroughtechnicalandoperationalmeasures,theindustryisunderpressuretoaccepttheadditionalburdenofsocalledMarketBasedMeasures(MBMs).MarketBasedMeasurestoreduceCO2remainaverycontroversialissueamongshipowners.SomegovernmentsarguethatMBMswillsomehowincentiviseshipownerstoachievefurtherefficiencygains,andmightbridgethegaptheyperceivebetweenthesignificantefficiencyimprovementsthatshippingisalreadydeliveringandtheexpectationsthattotalmaritimetradewillcontinuetoexpandinresponsetothe(longterm)predictedgrowthoftheworldeconomy.
Butinthefaceofrisingfuelcosts,shipownersreasonablybelievethattheyalreadyhaveeveryincentiveto
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KEY ISSUES IN 2012
improvetheirfuelefficiency.Theintroductionoflowsulphurfuels,aspartofaseparateIMOagreement,isalsoexpectedtoincreasebunkercostsbyinexcessof50%.With2012lookinglikeoneofthemostfinanciallydifficultyearsforshipownersinlivingmemory,nowiscertainlynotthetimetointroduceanadditionalcostpressureintheformofanMBM.ManyintheindustryareconcernedthatsomegovernmentsaremoreinterestedinhowmuchmoneycanbesqueezedfromshippingthroughanMBM,ratherthananyfurtheremissionsreductionthatthismightactuallydeliver.ThechallengeforICS,astheindustry’sprincipalinternationaltradeassociation,isthatdespiteshipowners’justifiedsuspicionsaboutMBMs,itisnecessaryfortheindustrytoaddressthepoliticsofclimatechangeandsomedifficultrealities.
ThefirstoftheseisthattheUNFCCC,anditshighleveldiscussionsaboutreplacingtheKyotoProtocol,isinlargepartdrivingtheagenda.Inaddition,therearethesignificant,andsomewouldargueunrealistic,commitmentsthathavealreadybeenpledgedbynationssuchasEUMemberStates,toreducetheirtotalCO2emissionsdramatically.UnlessIMOcandemonstratethatitismakingrealprogresstowardsthedevelopmentofaninternationalMBMforshipping,theindustrymaybefacedwiththeunwelcomeprospectofregionalaction.
TheotherimportantpoliticalrealityisthedecisionbythemostrecentUNClimateChangeConferenceinDurban,inDecember2011,toestablishtheGreenClimateFund.ThisaimstogenerateUS$100billionperyearby2020,inordertohelpmitigationandadaptationprojectsin
Regulationsenterintoforceforover90%ofworldfleet
ShipEnergyEfficiencyManagementPlan(SEEMP):mandatoryimplementationforallships
EEDIrequiresnewshipstomeetagreedefficiencytargets
Newshipsmustimproveefficiency10%
20%CO2reductionpertonne/km(industrygoal)
50%CO2reductionpertonne/km(industrygoal)
Newshipsmustimproveefficiencyupto20%
Newshipsmustimproveefficiency30%
IMOagreementontechnicalregulationswillreduceships’CO2MARPOLAnnexVI,Chapter4adoptedJuly2011
2013 2015 2020 2025 2030 2050
developingnations.Insimpleterms,thiscanperhapsbeseenasthepriceforpersuadingdevelopingnationstoagreetocontinuenegotiationsonanewUNclimatechangeaccord,scheduledforadoptionin2015.ThisnewUNagreementisintendedtoincludecarbonreductioncommitmentsbyemergingeconomies,notjustfromdevelopedorsocalled‘AnnexI’nationsasisthesituationatpresent.BetweennowandthenextUNClimateConference,inQatar,inDecember2012,theUNFCCCmemberswillbegintoconsiderhow,andfromwhom,thismoneyisgoingtoberaised.
AhighlevelworkinggroupsetupbytheUNSecretaryGeneralandchairedbythepremiersofNorwayandEthiopiahasappearedtosuggestthatsomeUS$16billionperyearcouldberaisedfrominternationalshipping.ButinamorerecentWorld
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TowardsanIMOMBMICSisleadingindustryrepresentationonthediscussionsatIMOtodevelopaMarketBasedMeasureforshipping,withIMOhavingaviewtoadoptionin2014.
In2011,ICSmemberstooktheimportantdecisiontodeclaretheindustry’spreferenceforanMBMdirectlylinkedtofuelconsumption,ratherthananemissionstradingscheme(ETS).IfgovernmentsdecidethatanMBMshouldbeadopted,ICSmembershaveagreedthatamechanismlinkedtofuelconsumptionistheonethatmostshippingcompaniescouldprobablylivewithinordertoensurealevelplayingfieldandtheavoidanceofseriousmarketdistortion,concludingitwouldbefarsimplertomanageandmoretransparentthananETS.
Inawelcomemove,theIMOSecretary-GeneralhasannouncedtheintentionofIMOtoconductafullimpactassessmentofthevariousMBMproposals,withdetailedtermsofreferencetobedevelopedin2012.
Bankreport,preparedfortheG20SummitinCannesinNovember2011,itwassuggestedthatshippingshouldcontributesomeUS$25billionperyear.Andthedemandsdonotstopthere.SomegovernmentshavepublicallysuggestedthatonlyaproportionofanymoneycollectedfromshippingshouldactuallygointotheGreenFund,andthatasignificantchunkshouldgostraightintothetreasuriesofthegovernmentscollectingit,implyingthatthechargeimposedonshippingcouldactuallybeevenmore,perhapsasmuchasUS$40billionperyear.ThepositionofICSisthatifgovernmentsdecidethatshippingshouldcontributetotheGreenFund,thenthepaymentsshouldbeproportionatetoshipping’scontributiontotheworld’stotalCO2emissions.TocontributethekindofsumswhichtheWorldBankhassuggestedwouldbetotallyinequitable
andalmostcertainlyviewedbymanyemergingeconomiesasataxontrade
–aformof‘greenprotectionism’.
However,theparamountgoalfortheshippingindustryistheavoidanceof‘doublecharging’throughcontributionstotheUNFCCCandviaanyMBMagreedatIMO.TherewouldthereforeseemtobeaneedforaclearlinkagebetweenanyIMOMBMandanyshippingcontributiontotheGreenFund.
TheotherpoliticalrealitythatshippinghastoaddressistheUNFCCCprincipleofCommonButDifferentiatedResponsibility(CBDR),wherebytheemissionreductioncommitmentsacceptedbydevelopingnationsarelessthanthoseofmatureeconomies.ThechallengehasbeenhowtoreconcilethiswiththeIMOprincipleofnomorefavourabletreatmentforshipsunderdifferentflags.On
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ComparisonofCO2emissionsbetweendifferentmodesoftransportgramspertonne-kmSource:NTM,Sweden
600
500
400
300
200
100
0
Cargovessel2,000-8,000dwt
21
Air freight
747-400 1,200 km
flight
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Cargo vessel over 8,000 dwt
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trailer 50
theonehand,theEuropeanUnionthreatensregionalactionifIMOfailstodeliveronCO2,whileontheother,developingnations-ledbyChina,IndiaandBrazil-remainopposedtosupportinganIMOagreementwhichtheyfearmightprejudicetheirpositionatthehighlevelUNFCCCnegotiations.
Intheevent,withtheindustry’sfullsupport,IMOhasalreadyproveditselftobeeminentlycapableofdeliveringaglobalsolutionforshippingwhichcanbereconciledwiththeCBDRprinciple.TheJuly2011agreement,whichadoptedbindingglobalregulationsfortechnicalandoperationalmeasurestoreduceships’emissions,willenterintoforceinJanuary2013andwillapplytoatleast90%oftheworld’stonnage.ToaddressCBDR,theagreementincludedregulationsontechnologytransferandtechnicalassistancefordevelopingnations(althoughthedetailsofhowthiswillworkarestill
beinghotlydebated)aswellasaflagstatewaiverwithrespecttotheEEDI(althoughtheindustryhasdecidednottomakeuseofthis).
SecuringsupportforanIMOMBMfromnationslikeChinaandIndiawillalsorequireaccounttobetakenofCBDR.However,reconcilingtheCBDRprinciplewithanIMOMBM,whichmustapplyequallytoshipsofallflagsinordertoavoidmarketdistortion,willnotbeaneasytask.ButifanyofthemoneycollectedbyanIMOMBMwaschannelledtotheGreenFund(perhapsviaanIMOcompensationfundintowhichmoneyraisedfromshippingwaspaid)thiscouldperhapsbeameansofmeetingtheCBDRprinciple.Developingnationswouldbereceivingmoremoneythantheywerecontributing,whilepreservingthelevelplayingfieldforshipping.However,thechallengeofpersuadingnationssuchasChinaandIndiato
agreetosuchanapproachshouldnotbeunderestimated.
ICSwillcontinuetosupportIMOasthebodywherediscussionsaboutashippingMBMandanycontributiontotheGreenFundshouldtakeplaceHowever,theindustrywillfirmlyresistanynotionthatitcanberegardedasacashcow,andwillcontinuetoemphasisethatthebestmeansofdeliveringmeaningfulCO2emissionreductionwillbethroughtechnicalandoperationmeasures,ratherthanamechanismwhoseprincipalpurposeissimplytoraisemoney.
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RepresentingtheGlobalShipping
Industry
14
TheYearinReview
LowSulphurFuel
In2008,IMOadoptedradicalamendmentstoMARPOLAnnexVIgoverningatmosphericpollution,whichformostshipswillrequiretheuseofexpensive,distillategrade,lowsulphurfuel.Whiletheuseofexhaustgascleaningsystems(scrubbers)ispermittedasanalternative,itisstillunclearwhetherthesewillbetechnically,environmentally,oreconomicallyviableforuseonawidespreadbasis.
Theenormityofthischange,anditseconomicimpactonshippingshouldnotbeunderestimated.Fuelisbyfarthelargestoperationalcostforshipownersandhasalreadyincreasedinpricebyabout300%since2000.Thecurrent50%pricedifferentialbetweendistillateandresidualfueloilispredictedtoincreasefurtherifthenewdemandthatwillbecreatedbytheMARPOLrequirementsisnotmatchedbyincreasedsupply.Exhaustgasscrubbers,assumingtheywork,andthatquestionsareresolvedaboutthewastethatisproduced,havebeenpredictedtocostinexcessofUS$2millionperengineiffittedonboardlargerships.
PerhapsthemostcontroversialrequirementinMARPOLAnnexVIconcernstheneedforshipsoperatinginEmissionControlAreas(ECAs)toburnfuelwithnomorethan0.1%sulphurasfrom2015.Atpresent,theBaltic,theNorthSea,andtheentireWestandEastcoastsoftheUSandCanadahavebeendesignatedassulphurECAsbyIMO,attherequestofthegovernmentsconcerned.Thispresentsamajorchallengefortheoilrefiningindustrywhichwillhavetoexpandtheproductionofcompliantlowsulphurfueltomeetthenew
demand.ThisiscomplicatedbythefactthatitisnotyetfullyknownwhichadditionalareasmaybedesignatedasECAs.Forexample,theEuropeanParliamenthasproposedthatallEUwaterswithin200milesofthecoastshouldbedeclaredassulphurECAs.WhetherthiswillbeacceptedbyEUMemberStates,orinturnwillbesupportedbythescientificstudiesrequiredtogainIMOapproval,isstillanopenquestion.
WhentheMARPOLamendmentswereadopted,ICSwelcomedtheIMOagreementasanacceptablecompromise,althoughthiswasinthecontextoftheevenmoredraconianmeasuresproposedbymanygovernments,andthethreatbytheEUtoimposeanimmediateregionalsolutionifIMOwasunabletodeliveraglobalagreement.Howevertheimplementationofthenewrequirementswillbefarfromeasy,andICSiscloselymonitoringtheprogressthatisbeingmadetoensurethatthedemandfromshippingfordistillatefuelcanactuallybemet.IntheUnitedStates,itisstillveryunclearwhetherornotenoughfuelwillbeavailablefortheUSshippingindustry,letalonethehugeamountofinternationalshippingthattradesinandoutoftheworld’slargesteconomy.
RecentstudiessupportedbytheEuropeanCommunityShipowners’Associations(ECSA)havealsosuggestedthatthemodalshifttolandtransportthatwillprobablyresultfromtheapplicationofthe0.1%limitonsulphurinfuelcouldgreatlydamagelocalshortseashippingwhilebeingdetrimentaltothelocalenvironment.ThisisalsoabigconcernforGreatLakestradesaffectedbytheUS/Canada
15
RepresentingtheGlobalShipping
Industry
ECA.Theseconcernsarenowsharedbymanygovernments,butitremainstobeseenifanywillrequestthatIMOshouldnowrevisittherequirements.
WhilethereisaformalmechanismintheIMOagreementtocompleteareviewby2018ofprogressmadetowardsmeetingthedemandfor0.5%sulphurfuelthatismeanttobeusedoutsideofECAsby2020,ICShasbeenpressingIMOtostartworknowondevelopingamethodologythatcanconsiderallofthemajorchangesrequiredbythenewregime.Forpoliticalreasons,theUSandEUgovernmentshavesofarbeenreluctanttosupporttheICSproposal.Butthisissueoffuelavailabilityisbecomingincreasinglypressing,andICSwillagainmakeaformalwrittenproposaltotheIMOMarineEnvironmentProtectionCommitteeinOctober2012.
IMOagreementtoreduceatmosphericpollutionfromships
Year 2005 2010 2015
1.5%
1.0%
0.1%
SulphurcontentoffuelpermittedinEmissionControlAreas
BallastWaterManagement
TheIMOBallastWaterManagement(BWM)Conventionwasadoptedwithgreaturgencybygovernmentsin2004,inordertoaddressenvironmentalconcernsaboutdamagetolocalaquaticecosystemscausedbytheunwantedintroductionofforeignmicro-organisms,whichisapparentlyfacilitatedbyinternationalshipping.
TheadoptionoftheBWMConventionwasaclassiccaseofaspirationallegislation.Forreasonsthatarewellunderstood,includingtheeconomicdamagetotheUSeconomyfromtheunwantedinfluxofzebramussels,therewashugepoliticalpressureforIMOtoadopttheConventioneightyearsago.Buttheequipmentneededtocomplywiththenewrequirements,andthecomplextechnicalguidelinesneededtoensureproperimplementation,hadnotthenbeendeveloped,whichiswhyitisonlynowthatgovernmentsarealmostinapositiontoratify.
FollowinganincreaseinthenumberofratificationsithadbeenexpectedthattheConventionwouldenterintoforceduring2012.However,atanIMOmeetinginJanuary2012,somemajorchangeswereproposedtoimportantdraftguidelinesonballastwatersamplingandanalysisthatwillbeusedbyportstatecontrolinspectors,whichwouldbeverydamagingtoshipownersifadopted.ICSmadeastrongstatementattheendoftheIMOmeetingaboutthedirectionthathadbeentakenand,supportedbymanyflagstates,thesedraftguidelineswillnowbereconsidered.However,thisnowmeansthatthesesamplingguidelineswillnotbeagreeduntilatleast2013,whichinturnisexpectedtofurther
Timetablefornewlimitstosulphurcontentinships’fuelagreedbyIMO
2010-EmissionControlArea(ECA)limitreducedto1%(from1.5%)
2012-Globallimitreducedto3.5%(from4.5%)
2015-ECAlimitreducedto0.1%
2020-Globallimitto0.5%butareviewin2018,withauthoritytodelayimplementation,willdeterminewhetherthisisachievable.
2025-Globallimitto0.5%notwithstandingtheresultofthe2018review.
16
Reductioninnumberofmajoroilspillsperyear(over700tonnes)Source:ITOPF
1972-1981 1982-1991 1992-2001 2002-2011
250
200
150
100
50
0223 94 64 31
delaytheadditionalratificationsneededtobringtheConventionintoforce.ThiscreatesotherproblemsforshipownersduetothefixeddatesbywhichexistingshipshavetoinstalltheveryexpensivenewtreatmentequipmentasrequiredbytheConvention’stimeline.
Therearestillgenuineconcernsabouttheavailabilityofsuitableequipment,therobustnessofthetypeapprovalprocess,thehugeexpenseofretrofittingexistingships,andthepresentlimitedpossibilitiesfortreatmentsystemsforlargervessels.Thatsaid,progressisnowbeingmadetoapprovevariousballastwatertreatmentsystemsasanalternativetoballastwaterexchangeatseaoncethisisnolongerpermitted.
Completionofthisworkislongoverduegiventhatnewshipsarealreadymeanttobeconstructedwiththeseexpensivenewtreatmentsystems.ICShascontributedsignificantlytothisworkandcontinuestoprovideaconsultanttotheGESAMP(JointGroupofExpertsontheScientificAspectsofMarineEnvironmentProtection)BallastWaterWorkingGroupthathasbeenconductingthedetailedassessmentofthenewequipment’senvironmentalacceptability.Meanwhile,ICScontinuestoencouragefullco-operationwithlocalballastwaterexchangerequirementswhereveritissafeforshipstodoso.
SolongastheBWMConventionhasnotenteredintoforce,thiswillcontinuetoencouragethedevelopmentoflocalrequirementsthatareatvariancetothoseagreedbyIMO(seeseparateitemonUnitedStatesDevelopments).Thepossibilityremainsofballastwaterchaos.
ChangestoMARPOL
InadditiontothehighprofilediscussionsaddressingCO2andotheratmosphericemissions,awiderangeofotherenvironmentalissuesremainonIMO’sagendarequiringdetailedinputfromICS.AlargeproportionofICSresourcesiscommittedtoparticipatingintheongoingworkofnumerousIMOCommitteesandworkinggroupswhichareconstantlyupdatingenvironmentalregulationsandtechnicalcodes.
Meanwhile,atthe‘high’politicallevel,ICSplanstosupportIMOinitsparticipationatthe‘Rio+20’UnitedNationsConferenceonSustainableDevelopmentinBrazilinJune2012.ThiswillprovideauniqueopportunitytohighlightthesuccessthattheindustryandIMOhavehadindeliveringcontinuousimprovementinshipping’senvironmentalperformancethroughthedevelopmentofa
comprehensiveregulatoryframeworkandthewidespreadglobalenforcementoftheInternationalConventionforthePreventionofPollutionfromShips(MARPOL).InJuly2011,IMOadoptedchangestoAnnexVoftheMARPOLConvention,concerninggarbage,thatwillenterintoforceinJanuary2013.TheseweresupportedbydetailedguidelinesadoptedbytheMarineEnvironmentProtectionCommitteeinMarch2012.Thereisnowanewrequirementspecifyingthatdischargeofallgarbageintotheseaisprohibited,exceptwhereexpresslyprovidedotherwise(thedischargesstillpermitted,incertaincircumstances,includefoodwastes,cargoresiduesandwaterusedforwashingdeckandexternalsurfacescontainingcleaningagentsoradditiveswhicharenotharmfultothemarineenvironment).FollowingtheparalleladoptionbyIMOofnewGuidelines
17
RepresentingtheGlobalShipping
Industry
onGarbageManagementPlansthatmustbecarriedonboardships,ICSwillbereviewingitsownmodelplanandbestpracticeguidelinesforshipowners.
Somewhatcontroversially,inJuly2011IMOalsoadoptedamendmentstoMARPOLAnnexIVconcerningthepreventionofpollutionbysewagefromships,whichincludethepossibilityofgovernmentsestablishing‘SpecialAreas’forthepreventionofsuchpollutionfrompassengerships,andwhichdesignatetheBalticSeaasthefirstsuchSpecialArea.TheimpactofpassengershipswithrespecttonitratepollutionoftheBalticiswidelyacknowledgedtobeinsignificantincomparisontomajorsourcesofpollutionsuchasagriculture.Theoperationalimplicationsofcomplianceandthedifficultiesoffindingsuitablereceptionfacilitiesareoutofallproportiontotheenvironmentalbenefit.Therealconcern,however,istheprecedentthismightcreatefortheintroductionofallsortsofotherMARPOL‘SpecialAreas’beingestablished,potentiallyapplyingtoallshiptypes.ICShasalreadyhadtocountersuggestionsthattheAnnexIVSpecialAreamightalsoapplytocargoshipswhichtypicallyhave20personsonboardasopposedto2,000.Thereisadangerthatsuchspecialpleadingbycoastalstatesmaygraduallyservetoerodetheconceptofatrulyglobalregulatoryframework.
ShipRecycling
ICSremainsfirmlycommittedtotheearlyentryintoforceoftheIMO(HongKong)ConventionontheSafeandEnvironmentallySoundRecyclingofShips,notleastthroughthepromotionoftheinter-industry
GuidelinesonTransitionalMeasuresforShipownersSellingShipsforRecycling,whosedevelopmentwasledbyICS.TheindustryGuidelinesarespecificallyintendedtohelpimprovesafetyandenvironmentalconditionsinrecyclingyardsinadvanceoftheentryintoforceofthenewConvention.
ICScontinuestoco-operateinanambitiousIMOprogrammetopromotethenewShipRecyclingConvention.InMarch2012,IMOadoptedfurtherguidelinesonimplementationforPartiessupportedbyguidelinesfortheauthorisationofshiprecyclingfacilities.ItisverymuchhopedthatthesewillnowbeappliedbythosegovernmentswithauthorityoverthevastmajorityoffacilitieswhicharelocatedinAsia.Theearlyidentificationofsoundrecyclingfacilitiesshouldgreatlyassisteffortsbyshipownerstomeettheirresponsibilitiesonavoluntary
basisinadvanceoftheHongKongConventionenteringintoforce.
ShipbuildingStandards
Themaintenanceofhighstandardsofshipconstructionisoftheutmostimportance.TheobjectiveofICSisthatshipbuildingstandardswillcontinuetobetakenforwardsothatwithanappropriatelevelofmaintenance,andadequatemarginsforcorrosion,futureshipswillbeconstructedsothattheywillcontinuetobe‘fitforpurpose’throughouttheirtypical25yearlifespan.
ICScontinuestoparticipateinacrossindustryinitiative,co-ordinatedbytheInternationalAssociationofClassificationSocieties(IACS)toprovideguidanceontheharmonisationandamendmentoftheCommonStructuralRules(CSRs)forbulkcarriersandtankers.Theintentionistoprovideaharmonisedsetofrules,forusebyallclasssocieties,oncommonaspectsofhullstructuredesign,supplementedbydedicatedsectionsonthespecificrequirementsforthesetwoshiptypes.IACShasbeenoverwhelmedbythehugenumberofcommentsreceivedfromshipowners,alargeproportionofwhichhaveleddirectlytoproposalsforrulechanges.Whilethecarefulattentionbeinggiventothisfeedbackfromindustryisverywelcome,itseemsthatthefinalisationofthenewrules,sothattheymaybesubmittedtogovernmentsatIMO(forusewiththeIMOGoal-basedStandardsinitiative)isnowlikelytobedelayeduntil2013.
CloselyrelatedtotheIACSCSRs,IMOcontinuestofinalisearrangementsfortheimplementationofthe2010amendmentstotheSOLAS
18
Conventionconcerningthenew‘Goal-basedStandards’(GBS)fortheconstructionofbulkcarriersandoiltankersof150moroverinlength.IthasnowbeenresolvedthatclasssocietiesshouldpayfortheGBSverificationprocess,butquestionsremainastowhetherthereisanadequatenumberofsuitablyqualifiedauditors.
InChina,inOctober2011,theChairmanledanICSdelegationtothelatestroundof‘Tripartite’discussionsaboutshipbuildingstandardswithrepresentativeorganisationsofshipowners,classificationsocietiesandshipyards.Topicsconsideredincluded:measurestoreduceCO2emissionsincludingtheapplicationoftheEEDIandrequirementstoensuretheprovisionofadequateship’spower;thechallengespresentedbytheimplementationoftheIMOBallastWaterManagementandShipRecyclingConventions;andthereviewbeingundertakenbyIACSofitsCommonStructuralRules.ICSwillbeco-ordinatingthearrangementsforthenextTripartitemeetingtobeheldinKoreainNovember2012.
CargoSafety
Thetransportofgoodsbyshipmaysometimesinvolveahighdegreeofphysicalriskduetothedangerspresentedbytheharshconditionsthatoftenprevailatsea.Forthemostpartthesearerisksthatcanbesuccessfullyandsafelymanagedbyshipoperatorsandtheircrews.However,suchriskscanbeseriouslymultipliedwheninsufficientcareisgiventothesafeloadingofcargoes,afactorwhichissometimesbeyondshipowners’directcontrol.WhileIMOhasbeenverysuccessfulwithrespecttoensuringthatshipbuildingstandardsand
19
safenavigationalproceduresarewidelyenforcedbygovernments,therigorousapplicationofIMOstandardsdoesnotalwaysextendsoeffectivelytothoseactionsthatoccurfarbeyondtheship/portinterface.
Thesefearshaverecentlybeenbroughthomeinamostdisturbingmanner.Thereisnowveryseriousconcern(andanger)throughouttheindustryabouttherecentlossofseveralshipscarryingnickelore/ironorefinesloadedinIndia,thePhilippinesandIndonesia,apparentlyduetocargoliquefactioncausingcargotoshiftdramatically.Somecargoes,itseems,arebeingdeliberatelymisdeclared.Especiallyupsettingwasthetragiclossof22seafarersonthe‘VinalinesQueens’afterloadinganickelorecargoinIndonesia,inDecember2011.ItmustbestressedthatsuchproblemsarenotconfinedtoAsia,withbulkcarrieroperatorsreportingthatthewatercontentofironorecargoesisbeingsimilarlymisdeclaredbyshippersinBrazil.
ICSacknowledgesthattheissuesarecomplex,buttherootoftheproblemwouldseemtobetherefusalofsomeshipperstoallowtheappointmentofindependentsurveyorstoconductcargotestinginaccordancewithIMOrequirements,plusthecommercialpressureplacedonMasterstoacceptpotentiallyunsafecargoesatwhatareoftenremotelocations.Thepreventionofsimilarincidentsisanutmostpriority.Inco-operationwithIMO,Intercargo(whichrepresentsbulkcarrieroperators)theInternationalGroupofP&IClubs,andthegovernmentsofthosenationswhereproblemsseemtoexist,ICSisendeavouringtohelpfindasolutionthatwillassistshipownersandMasterstoresistanypressuretoacceptunsafecargoes.
Meanwhile,containershippingcompaniescontinuetobeconcernedbytheincidenceofshippersprovidingincorrectcontainerweights,andtheneedtoensurethatmarineterminalsalwaysverifytheweightofloadedcontainersagainstthecargomanifest,priortoloadingonboardship.FollowingaproposaltotheIMOMaritimeSafetyCommitteemadebyICSandtheWorldShippingCouncil(WSC),IMOhasbeenconsideringhowitmightestablishanewinternationalregulatoryrequirementtoaddressthisproblem.
Theindustry’saimisthatallexportedcargocontainersshouldhavetheirweightsverified,andthatthisinformationshouldbeconfirmedbythemarineterminaluponreceipt,andbeforevesselloading,andmadeavailabletotheshipoperatorsoitcanbeusedforstowageplanning.Aswellasimprovingsafety,sucha
measurewouldhelptoaddresswidersecurityconcernsaboutthecontentofcontainers.Inawelcomemove,theInternationalAssociationofPortsandHarbors(IAPH)gaveitssupporttothisinitiativeattheendof2011.
Disappointingly,forreasonsnotentirelyclear,somegovernmentshavesofarbeenlukewarmabouttheindustryproposaltoamendtheSOLASConventionanditremainstobeseenhowtheconceptwillbetakenforwardduring2012.Butintheabsenceofarequirementthatcontainerweightsdeclaredbyshippersareverifiedbyterminalsitseemslikelythatasubstantialnumberofcontainerswillcontinuetobemisdeclaredandthatoverweightcontainerswillcontinuetoposeaseriousrisktosafeshipoperations,toships’crew,andtootherpersonnelinthetransportchain.
Totallosses1994-2011bynumberofvessels(over500GT)Source:IUMI
200
180
160
140
120
100
80
60
40
20
0‘94 ‘95 ‘96 ‘97 ’98 ‘99 ‘00 ‘01‘02 ‘03 ’04 ’05 ‘06 ‘07 ‘08 ‘09 ‘10 ‘11
20
RepresentingtheGlobalShippingIndustry
TankerSafety
In2012,IMOwillbeapproachingtheendofamajorreviewoftankersafetythatissettoresultinsomeimportantregulatorychanges.ThiswasinresponsetoamajorreportbyanInterIndustryWorkingGrouponFiresandExplosionsonBoardTankers,towhichICScontributedwiththeOilCompaniesInternationalMarineForum(OCIMF)andIntertanko,andwhichwaspresentedtoIMOin2007followingasequenceofsometimesfatalexplosionsontankers.
ICShasplayedanactivepartinthediscussionsatIMOontheextensionofthepracticeof‘inerting’cargotankatmospheres.AtameetingoftheIMOFireProtectionSubCommitteein2011,animportantdecisionwasmadewithrespecttotheproposednewmandatoryrequirementsfortheinertingofchemicaltankers.Thenewcarriagerequirementswillapplytonewshipsover8,000dwt.InconjunctionwiththeInternationalParcelTankersAssociation(IPTA),ICShadhighlightedtheenvironmentalimpactofoperatingIGequipment,andhadindicatedthatacarriagerequirementforsub5,000dwtchemicaltankerscouldbeproblematic.TheIMOdecisionisthereforecompatiblewiththeICSposition.SubjecttotheadoptionofthenewregulationsbytheMaritimeSafetyCommitteeinMay2012,thisdevelopmentwillbeaddressedinaneweditionoftheICSTankerSafetyGuide(Chemicals)whichICSintendstofinalisein2013.
ICSfullysupportstheproposalstoamendSOLAStoprovidefortheapplicationofinertgas(IG)tonewoilandchemicaltankersabove8,000dwt.Itshouldbenoted,however,thatIMOdecidedthatthepossibleextensionofnewmeasurestoexistingtankersoflessthan20,000dwtwouldonlybe
21
consideredinthelightofexperiencegainedfollowingintroductionofIGonnewshipsof8,000to20,000dwt.However,aseriousexplosioninKoreainJanuary2012whichinvolvedasmallchemicaltankermightputrenewedpressureonIMOtoaccelerateitsconsiderationofIGforexistingships,asmightamajorfireonboardachemicaltankerthatoccurredintheGulfduringMarch2012(whichinvolvedtheadditionaldramaoflocalportsrefusingtoprovideaplaceofrefugeforthestrickenship,contrarytoIMOGuidelines).
ItisimportanttorecallthatadisturbingconclusionoftheoriginalindustryreportthatinformedtheIMOreviewwasthatotherwisecompetentandqualifiedseafarersarestillpronetobypassacceptedproceduresduringcargooperations,andthatthishadbeenafactorinanumberofsometimesfatalexplosionsontankers.Thesolutionsarecomplex,involvingmattersthatdonotalwaysreadilylendthemselvestoprescriptiveregulations,suchashowtofurtherinculcateagenuine‘safetyculture’amongstships’crews,whichtheneweditionoftheICSTankerSafetyGuideChemicalswillseektoaddress.
MalaccaandSingaporeStraits
Eachyeartherearemorethan70,000transitsbyshipsthroughtheStraitsofMalaccaandSingapore,whichisoneoftheworld’smoststrategicallyimportantinternationalwaterways,linkingtheFarEasttotheIndianOcean,theMiddleEastandEurope.WhilewishingtohelpensurenavigationalsafetyandenvironmentalprotectionoftheStraits,thelongstandingobjectiveofICShasbeentoencouragethemaintenanceoftheprinciplesoffreedomofnavigation
governinginternationalwaterwaysasenshrinedintheUnitedNationsConventionontheLawoftheSea(UNCLOS),sothatindividualshipsarenotchargedforsafetyservices.However,thishashadtobereconciledwiththechallengefacedbythelittoralstatesofIndonesia,MalaysiaandSingaporeinfinancingnavigationalsafety.ICShasconductedadetailedsurveyofincidentreportswhichitisanticipatedwillresultinthedevelopmentofproposalstoenhancethemanagementoftrafficintheStraits.InOctober2011,ICSpresentedthereport’sfindingstothemaritimeadministrationsofthelittoralstatesatameetinginKualaLumpur.
Onlyaverysmallproportionoftransitsresultinaccidentsornearmisses.However,theICSsurveyhasidentifiedheavyshippingtraffic,inappropriatespeedandthelossofsituationalawarenessassignificantfactorsthatneedtobeaddressed.TheICSreportpraisestheskillandprofessionalismofthosemanaging,operatingandnavigatingshipsintheMalaccaandSingaporeStraits.However,itisimperativethatsafetycontinuestobeprioritised.ICShasthereforealsosuggestedthatimprovementscouldbemadewithrespecttothelocationofpilotboardingareasandthetimingofpilotdepartures.ThereisalsoconcernabouttheunderstandinganduseofnavigationsystemssuchasECDIS,AISandradar,bothatseaandashore.Oftheincidentsexamined,whichinvolvedarangeofvesselsfromtugstotankers,68%resultedincollisions.Encouragingly,thelittoralstateshavewelcomedtheICSreportandarealreadytakingmeasurestofurther
22
23
RepresentingtheGlobalShipping
Industry
improvenavigationalservicesintheStraits.InconjunctionwithICS,itishopedthattheywillmakeajointsubmissiontoIMO,advisingonthecurrentstatusofthisimportantwork.
Meanwhile,althoughithastakensomewhatlongerthanexpected,thelittoralstatesareabouttostartconductingseatrialsintheStraitswithrespecttoaMarineElectronicHighway(MEH),althoughanumberofissuesneedtoberesolvedsuchaswhetheranAIScomponentwillbeincorporated.WhileitisICS’sintentiontorequestthatshipsactivelyparticipateinthesetrials,thiswillnotbepossibleuntildetailedplanningiscompleteandtheinfrastructureisfullyinplace.ICShasstressedtheimportanceofstandardisationandinteroperabilitybetweenshorebasedcomponentsofe-navigationinordertoavoidshippinghavingtocommunicatewithunharmonisede-navigationresourcesindifferentgeographicalregions.ThequestionoffreeaccessduringthetrialstotheseMEHdataservices,inaccordancewithUNCLOSprinciples,alsostillneedstoberesolved.
E-NavigationandECDIS
ICSwelcomesthegreatpotentialofe-navigationforimprovingnavigationalsafety.However,ICScontinuestoemphasisetheneedfora‘userfocused’approach,sothate-navigationisnotdrivensolelybyideasfromequipmentmanufacturersortheavailabilityofnewtechnology.ICSiscurrentlyengagedindetaileddiscussionsatIMO,andalsowithintheInternationalAssociationofMarineAidstoNavigationandLightHouseAuthorities(IALA),abouttheimplementationofIMO’se-navigationstrategy.Thisincludesuserneedsandservices,andthe
technicalspecificationsofvariousshipboarddevices.Inparticular,ICSisstillseekingtoensurethatnationalauthoritieswillnotregardVirtualAidstoNavigationasacheapermeansofprovidingstatutoryservices,andthattheycontinuetobeseenasacomplementratherthanareplacementforphysicalaidstonavigation.Apressingissueconcernsarrangementsfortheintroduction,inJuly2012,ofthenewmandatoryIMOrequirementsforECDIS(ElectronicChartDisplayandInformationSystems),whichICShaslongsupportedprovidedthattheindustry’sdefinitionof‘sufficientElectronicNavigationChart(ENC)availability’canbemetbeforethephased-incarriagerequirementbecomeseffective.ICShasbeencloselymonitoringprogressattheInternationalHydrographicOrganization(IHO)towardsmeetingtheENCcoveragenecessarytomakethemandatorycarriageofECDISviable.
Inparticular,ICShasbeenengagedwiththeIHOandotherinterestedorganisationsindiscussionsoverpotential‘operatinganomalies’thathavebeenidentifiedwithECDIS.AtesthasbeendevelopedbyIHOthatallcompanieshavebeenencouragedtouseinordertodetectsuchanomalies.DisturbinglyithasbecomeapparentthatnotallECDISsystemsmaybefullyeffective,withathirdofthosetestedreportedlyfailingtodisplaysignificantunderwaterfeaturesinthe‘standard’displaymode.AtleastonemanufacturerhasconfirmedtoIHOthatearlierversionsofitsECDISwillnotdisplaysometypesofwreckandunderwaterobstructionsinanydisplaymode,necessitatingthecontinueduseofpapercharts.
InviewofconcernsaboutfullENC
coverageandECDISoperatinganomalies,ICSisalsoquestioningproposalsbyAustralia(andothergovernments)toamendtheSOLASConventionwiththeeffectofprohibitingtheoperationofECDISintheRasterChartDisplaySystem(RCDS)mode.Therearealsoworriesabouttheambiguityofsuggestednewrulesonupdatingrelevanthardwareonboardthatcouldimplythatshipoperatorsmightconstantlyhavetoreplaceveryexpensiveequipment.
WiththecarriageofECDISabouttobecomemandatory,ICScontinuestohighlighttheimportanceoftrainingseafarersinitsuse.ICShasthereforecontributedtotheproductionofguidanceonissuesofcompetencyandtrainingwhichhasbeenco-ordinatedbytheNauticalInstitute.ICShasalsosubmitteditsowndetailedproposalsonECDIStrainingrequirementstotheIMOSubCommitteeonStandardsofTrainingandWatchkeepingwhichmeetsinMay2012.ThesesuggestbestpracticerecommendationsforthetimingofdeliveryofECDIStrainingforbothnewandexistingseafarers,takingaccountofpresentrequirementsforupgradingtrainingascontainedinthe2010amendmentstotheSTCWConvention.
TrainingStandards
Thecompetenceofseafarersisamostcriticalfactorinthesafeandefficientoperationofships,andhasadirectimpactonthesafetyoflifeatseaandtheprotectionofthemarineenvironment.TheIMOConventiononStandardsofTraining,CertificationandWatchkeepingforSeafarers(STCW)constitutesacomprehensivesetofregulationsintendedtomaintainthehigheststandardsofcompetenceglobally.Inparticular,the
24
RepresentingtheGlobalShipping
Industry
STCWConventionplacesimportantresponsibilitiesonmaritimeemployers.
InJanuary2012,widerangingamendmentstotheSTCWConventionenteredintoforce,havingbeenadoptedbyaDiplomaticConferenceinManilainJune2010.Withimmediateeffect,companiesarenowrequiredtocomplywiththenewSTCWminimumresthourprovisionsforseafarers(seepage27).Manyoftheothernewrequirementswillbephased-inbetweennowand2017.SomegovernmentsarenowexpectedtobeginapplyingthenewSTCWrequirementsonanationalbasis,suchasenhancedfiveyearlyrefreshertraining,orthenewmandatoryrequirementsfortheonboardtrainingofratingstobedocumented.ThisincludestrainingforthenewSTCWgradesofAbleSeafarerDeckandAbleSeafarerEngine,whichmanyflagstatesareexpectedto
requireexistingratingstoundergoinordertocomplywiththeirminimumsafemanningrequirements.
FromJanuary2013,allnewseafarerscommencingtrainingwillberequiredtodosoinaccordancewiththenewtrainingandcompetencestandardsinSTCW2010.However,until2017governmentsmaycontinuetorenewandrevalidateexistingcertificatesinaccordancewithcurrentSTCWprovisionswhichappliedimmediatelypriortoJanuary2012.
NumerousamendmentswereadoptedbyIMOtotakeaccountofrecenttechnicaldevelopmentsrequiringnewshipboardskills,suchastheuseofElectronicChartDisplayandInformationSystems(ECDIS)ortheneedtogivemoreemphasistoenvironmentalmanagement.Butthechangesalsocoversuchmattersasnewtrainingrequirementsforleadershipandteamwork,enhanced
refreshertrainingforqualifiedseafarers,aswellastheintroductionofdetailedstandardsofcompetenceforthenewgradeofAbleSeafarermentionedabove.Therearealsonewcompetencetablesandtrainingrequirementsforpersonnelonoilandchemicaltankersandgascarriers.
Althoughnotadirectresponsibilityofcompanies,theindustrywillwishtoensurethatasmanygovernmentsaspossiblecomplywiththerevisedrequirementstoreporttoIMOtheactionsthathavebeentakentoimplementthenewSTCWstandards.Thiswillbenecessary,byJuly2013,ifgovernmentswishtomaintainaplaceontheIMO‘whitelist’ofnationsthathavedemonstratedcontinuingadherencetoSTCWstandards,soastoavoidportstatecontroldifficultiesfortheirships,orflagstaterecognitionproblemsforseafarersworkingonforeignshipstowhomtheyhaveissuedSTCWcertificates.
25
ICSanticipatesthattheremaybeaneedtoclarifytheinterpretationofhowsomeofthenewstandardsaretobeapplied,forexamplewithregardtohownewrefreshertrainingshouldbeimplemented,deliveredandassessedorwhenthenewsecuritytrainingrequirementsenterintoforce.Thereisalreadyevidencethatsomemaritimeadministrationsmaybeintendingtoapplythenewrequirementsoverzealously.
TheoverridingobjectiveofICSanditsmembernationalshipowners’associationsisthatthestandardsrequiredbytheSTCWConvention,asamendedin2010,areputintoeffectassoonaspossible,andthatthehigheststandardsofseafarercompetencewillcontinuetobemaintainedworldwide.In2011,ICSthereforepublishedaneweditionoftheISFGuidelinesontheIMOSTCWConventiontoadviseshippingcompaniesandshipboardpersonneloftheirfundamentalobligationsasrequiredbythe‘Manilaamendments’.Aswellasprovidingadviceoncompliance,theGuidelinesalsogivebackgroundinformationonthephilosophyunderlyingthecompetence-basedapproachtotrainingwhichtheSTCWConventionseekstopromote.
In2012,ICSaimstocompleteitsambitiousscheduleofrevisingitswidelyusedISFonboardtrainingrecordbookstotakeaccountoftheManilaamendments.UpdatedOnBoardTrainingRecordBooksfordeckandengineratings(includingthegradesofAbleSeafarerDeckandEngine)havealreadybeenpublished,andrevisedtrainingrecordbooksfordeckandengineofficertraineesshouldbepublishedinthefirsthalfof2012.ICS/ISFiscurrentlyindiscussion
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withmajorlaboursupplynationssuchasthePhilippinesabouttheuseandapprovaloftheupdatedbooks.
AsaresultoftheSTCWamendments,employersshouldnowgenerallyhavefargreaterconfidenceinthevalidityofseafarers’certificates,regardlessofthecountryofissue.Thisisnottosaythatquestionsaboutthequalityoftraininginmanytraininginstituteshavebeeneradicatedcompletely.However,thereisnowaclearersensethatallseafarersworkinginternationallyarepartofthesameglobalprofession,inwhichtheparamountimportanceofsafetyoflifeatseaandtheprotectionofthemarineenvironmentisfarmorewidelyrecognised.
WorkHourRegulations
Thepreventionoffatigueamongstships’crewsanditspotentialimpactonsafetyisamajorpriorityfortheindustryanditsregulators.InJanuary2012,asaresultoftheentryintoforceofChapterVIIIoftheIMOSTCWConvention,newandstricterregulationscameintoforcegoverningseafarers’hoursofrest.Theminimumrestthatmustbereceivedinany7dayperiodisnow77hoursratherthan70hoursandtheflexibilitypreviouslypermittedbythe‘2dayderogation’ruleundertheIMOruleshasnowbeenremovedsothatseafarersmustalwayshave10hoursrestinany24hourperiodwithnoexceptions(apartfromduringemergencies).Amostimportantrequirementisthatshippingcompaniesarenowrequiredtomaintain,onamandatorybasis,individualrecordsofseafarers’hoursofworkandrestthatmaybesubjecttoinspectionbyportstatecontrol.
TherationaleforthenewSTCWrequirements,whichwereadoptedin2010,wastoensurethattheIMOrequirementsarecompatiblewiththosecontainedintheILOMaritimeLabourConvention(MLC)onceitentersintoforce.ThetaskofIMOwascomplicatedbecausetheregimesadoptedbyIMOandILOweredevelopedfordifferentpurposes.STCWprescribesminimumresthoursfromthesafetyperspective,whiletheILOConventionalsotakesaccountofsocialissues,suchasthepointatwhichadditionalpaymentsforovertimeshouldnormallybemadeandtheextenttowhichworkhoursmaybesubjecttonegotiationbetweenemployersandunionsincollectivebargainingagreements-issuesoutsidetheremitofIMO.
ICSissatisfiedthatthechangestominimumresthoursagreedbyIMOarefullycompatiblewiththeILOrequirements,althoughinpracticetheyaresomewhatstricter.Inreality,giventhattheSTCWamendmentshavealreadyenteredintoforcetheyarelikelytobecomethedefaultregimeforportstatecontrolinspectors.AnimportantaspectofSTCW2010isthesocalled‘Manilaexception’clauseswhichcontinuetopermitoccasionaldeviationfromthenormalminimumresthoursprovidedcompensatoryrestisprovided.Whilelackingtheflexibilityoftheold‘2dayderogation’rule,thiswillallowsomeflexibilityduringperiodsofpeakworkload,particularlyimportantforshortseaoperators.However(withtheexceptionofemergencies)allseafarersarenowprohibitedfrombeingondutyformorethan14hourswithinany24hourperiod.
Manycompaniesarenowensuringthattheyaremaintainingaccurate
recordsofthehoursofworkandrestonboardshipbyusingtheISFWatchkeepersoftware,which,aswellasproducingindividualseafarer’srecordsintheformatrecommendedbyILOandIMO,allowscompaniesandcrewstoensurethattheycomplyfullywithboththeILOandIMOlimits.AnupgradedversionofISFWatchkeeperVersion3,whichallowsaccounttobetakenofthenewIMOSTCWresthourlimits,waslaunchedduring2011.
EmploymentRelations
Anunusualfeatureofinternationalshipping,whichobserversfromoutsidetheindustrysometimesfindsurprising,isthatthereisapowerfulandglobalseafarers’tradeunionintheformoftheInternationalTransportWorker’sFederation.TheITFhasadirectimpactonseafarers’employmentandworkingconditionsonaworldwidebasis.Whetheremployerslikeitornot,theITFisprobablyasrelevanttodayaswhenitwasfoundedover100yearsago,althoughtheemploymentconditionsenjoyedbyseafarersin2012areofcoursegreatlyimprovedandcompareextremelyfavourablytothosewhichtheywouldreceiveinsimilarjobsashore.
Atthe2011AnnualGeneralMeetingsofICSandISF,thedecisionwastakentofullyintegratethetwoassociations.However,theInternationalShippingFederationistheidentitywhichICSwillcontinuetousewhenaddressinglabourrelationsquestionsasa‘partisan’employer’sorganisation.AspartofamajorstrategicreviewwhichledtothedecisiontointegrateICSandISF,oneoftheimportantissuesidentifiedwastheneedtostrengthendialoguewithITFatbothstrategicandworkinglevels.The
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aimofmembernationalshipowners’associations,whichhavetheirownrelationshipswiththeirnationaltradeunionsthatareaffiliatedtoITF,istobeactivelyco-operativeonnon-contentiouspracticalmatters,buttostandfirmwhenrequired.
ISFhasalongstandinginstitutionalrolewithITFasitsofficial‘socialpartner’attheInternationalLabourOrganization(ILO),andhascommoncausewithITFnationalunionaffiliatesonmanyissuessuchaspiracyandtheunwarrantedcriminalisationofseafarers,aswellasmattersrelatingtotheregulationofsafetyandhighqualitytraining.Inthesphereofemploymentrelations,however,thecharacteristicrelationshipbetweenISFandITFhassometimesbeenmoreconfrontational,primarilyduetoITF’s‘FlagofConvenienceCampaign’againstopenregisters,anditsinsistencethatshipoperatorspayITFminimumwageratesinthefaceofthethreatofboycottactionbyitsdockworkeraffiliates.
Inrecentyears,however,lessemphasisperhapsthanhithertohasbeengiventothismoredifficultaspectofrelationswithITF.InpartthishasbeenduetothepositivefocusgivenbybothsidestothesuccessfuldevelopmentoftheILOMaritimeLabourConventionanditssubsequentimplementation.TherelationshipbetweenISFandITFhasalsoevolvedduetotheemergenceoftheInternationalMaritimeEmployers’Committee(IMEC),whichcomprisesindividualcompanies,andisnowanassociatememberofISF/ICS,andtheestablishmentoftheInternationalBargainingForumwhichconductsinternationalwagenegotiationswithITF.ISF’shistoricrefusaltonegotiatedirectlywithITFaboutseafarers’
termsandconditions,whichisamatterforindividualcompaniesandtheirnationalassociations,isthereforelessofanissue.RelationswithITFhavealsoimprovedfollowingtheresumptionofdiscussionsattheILOJointMaritimeCommissionaboutarevisionoftheILOMinimumWageforAbleSeafarers(seepage30).InMay2012,inordertoexploremeansoffurtherimprovingco-operation,ISFheldahigh-levelmeetingbetweenseniorrepresentativesofnationalshipowners’associationsandITFunionaffiliatesinLondon,thefirstsuchmeetingoutsideoftheinstitutionalsettingoftheILOforover10years.ItishopedthatthiswillbefirstofseveralmeetingsatwhichISFandITFmemberswillbeabletoidentifyissuesonwhichtheycancollaboratemoreeffectively,whilemaintainingdialogueonthosemattersonwhichtheremaystillbefundamentaldifferencesofapproach.
MaritimeLabourStandards
Forthelargemajorityofseafarers,employmentconditionsatseaalreadymatch,orinmostcasescomfortablyexceed,thosethattheycouldobtaininshorebasedemploymentathome.However,themaintenanceofgoodemploymentconditionsiscrucialtotheindustry’sabilitytoattractandretainthecompetentandwellqualifiedseafarersonwhomitdepends.
Followingratificationbyagrowingnumberofflagstatesincludingthemajoropenregisters(26ofthe30nationsrequired,atthetimeofwriting)theILOMaritimeLabourConvention(MLC)isexpectedtoenterintoforcegloballyverysoon,probablyduring2013.Therequired
tonnagethresholdhasalreadybeenachievedandcompaniesthereforeneedtobereadytoensurefullimplementationandcompliancewiththeMLCstandards.
TheILOMLCaddressesawiderangeofmattersincluding,amongstothers,theobligationsofshippingcompanieswithrespecttoseafarers’contractualarrangements,theresponsibilitiesofmanningagencies,workinghours,healthandsafety,crewaccommodation,cateringstandards,andseafarers’welfare.Asanofficialsocialpartner,underthetripartiteILOprocess,ISFwasresponsiblefornegotiatingthetextoftheConventiononbehalfofmaritimeemployers,withgovernmentsandseafarers’tradeunions.ISFthereforehasaveryspecialinterestinwantingtoassisttheConvention’ssmoothimplementation.
AnimportantaspectoftheConvention’senforcementwillbetheissuancebyflagadministrationsofMaritimeLabourCertificates,usuallyfollowinginspectionbyaRecognizedOrganizationsuchasaclassificationsociety,appointedbytheflagstate.ThereisalsoaseparaterequirementforshipstomaintainaDeclarationofMaritimeLabourCompliance.Importantly,compliancewiththeMLCwillbesubjecttoportstatecontrolaswellastoinspectionbyflagadministrations.
InDecember2011,inGeneva,ISFco-ordinatedshipownerrepresentationatamajortripartitemeetingofgovernments,employersandunionswhichagreedtermsofreferenceforaSpecialTripartiteCommitteethatwilloverseeproposalsforamendmentstotheILOMLConceitentersintoforce.TheChairman
oftheISFLabourAffairsCommittee,ArthurBowring(HongKong)servedastheemployers’spokesman,supportedby25delegatesfromnationalshipowners’associations.
ThevastmajorityofcompaniesshouldnothaveanydifficultycomplyingwiththesubstanceoftheConvention,sincethisislargelyderivedfromexistingILOmaritimestandardsandacceptedgoodemploymentpractice.However,theenforcementmechanismisnew,anditwillbeimportanttoavoidteethingproblemsassomeofthemoredetailedrequirementsareappliedandinterpreted.
Duringthecourseof2012,ISFexpectstopublishanupdatededitionofitsGuidetotheMLC.ThefirsteditionwasproducedshortlyaftertheMLCwasadoptedin2006,andsoughttointroduceshipoperatorstotheirobligationsunderthenewregime.Intheinterveningperiod,muchworkhasbeendonebyseveralILOtripartiteworkinggroups,comprisinggovernments,unionsandnationalshipowners’associationstoensurethatallconcernedunderstandtheirresponsibilities.ThissecondeditionhasthereforebeenupdatedtotakeaccountoftheserecentclarificationsfromILO.AdditionalguidancehasalsobeenaddedinordertohelpmaritimeemployersapplytheILOstandardsinapracticalmanner.ItishopedthatthesecondeditionoftheISFGuidewillproveusefulinassistingshippingcompaniesinpreparingfortheimplementationoftheMLCbygovernments,whetherintheircapacityasflagstates,portstatesorlaboursupplynations.ISF’sintentionistopromoteandhelp
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deliverthegloballevelplayingfieldofdecentmaritimelabourstandardsthatboththeshippingindustryandseafarersrequire.
ILOMinimumWage
Abouttwothirdsoftheworld’s1.5millionmerchantseafarerscomefromdevelopingcountries.Whilewageratesarecommonlyaffectedbyaseafarer’scountryofresidence,theshippingindustrygenerallyprovideshighlevelsofremunerationtoallthoseemployedatsea.Indeed,theshippingindustryisprobablyuniqueinthatithasamechanismforrecommendingminimumacceptableinternationalwagerates.
TheMinimumWageforAbleSeafarersisagreedbytheInternationalLabourOrganization(ILO)JointMaritimeCommission(JMC)whichcomprisesrepresentativesofnationalshipowner’sassociationsandseafarers’unions.ISF(theidentityusedbyICSwhenactingasanemployers’organisation)istheco-ordinatoroftheEmployers’GroupattheJMCwhiletheInternationalTransportWorkers’Federation(ITF)co-ordinatesseafarers’representation.UnlikeotherILOinstitutions,theJMCisbipartiteanddoesnotinvolvegovernments.InJanuary2012,theILOMinimumWageforAbleSeafarersincreasedtoUS$555amonthfromthepreviousfigureofUS$545whichhadcomeintoeffectin2009inlinewithanearlierscheduleofagreedincreases.ThislatestincreasefollowedanagreementbytheJMCwhichmetinGenevaattheendofApril2011.Inreality,theJMChasagreedafouryeardealwherebytheILOminimumwagewillincreasetoUS$568for
2013andUS$585for2014,withnofurtherrevisionexpectedtotakeeffectuntilatleast2015.Thiswillhopefullyprovideemployerswiththestabilitytheyneedduringthedifficulteconomiccircumstancesanticipatedintheyearsahead.
ISFbelievesthatthenewILO
ILOheadquartersinGeneva
wagefiguresarerealisticgiventhecontinuinguncertaintycreatedbytheglobaleconomiccrisis.ISFhadpreviouslyexplainedtoITFthatemployerssimplycouldnotagreetoanyimmediatefurtherincreases.However,whilemanyunionsrecognisedtheneedtohelpsafeguardemploymentforseafarers,some
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RepresentingtheGlobalShippingIndustry
unionswereclearlydisappointedbythisresponse.TheJMCthereforeagreedtoadoptascheduleofincreasesthatwillapplyuntil2015.
ISFremainsstronglycommittedtotheprincipleoftheILOMinimumWagerecommendationwhichisnowreferencedinthenewILOMaritimeLabourConvention,althoughithasinfactexistedforover50years.Whileitisonlyrecommendatory,andisnotdirectlyrelevanttootherseafarergrades,ithasastrongmoralauthorityandisparticularlyimportantforemployersindevelopingcountries.TheILOMinimumWagealsoinfluencesmanycollectivebargainingagreements,includingthoseenforcedbyITF,andissometimesreferredtoinlegalrulings.
TheILOMinimumWageissubstantiallyhigherthanthatpaidforcomparativeworkashoreindevelopingcountries.Moreover,theactualminimumwageissignificantlyhigher,typicallyperhaps50%more,onceovertimehours(fixedataminimumofoneandaquartertimesbasicpay)andothermandatoryILOrequirements,suchaspaymentsforleaveentitlements,aretakenintoaccount.Itisalsoonlyaminimum.Mostratingsfromdevelopingcountriesreceivesignificantlymore,whileofficersreceivesubstantiallymore,withdifferentialsbetweenofficersfromOECDanddevelopingcountriescontinuingtonarrow.
AsianDevelopments
Toacertainextent,somepartsoftheshippingindustryhavebeenshieldedfromtheeffectsoftheglobaleconomicslowdownbycontinuinggrowthinAsia,drivenespeciallybyChina’sinexorableexpansionanditsseeminglyinsatiabledemandforrawmaterials.However,inearly2012,Chinaannounceditsintentiontosubtlyrebalanceitseconomy,withlessemphasisonmassivefurtherinfrastructuregrowthandaredirectionofresourcesintoincreasedpersonalconsumption.WhileChinaisstillexpectedtocontinuetogrowatanimpressiverate,thisshiftinpolicycouldeventuallyhaveimplicationsforthefutureexpansionofChina’sdemandforshippingservices.Inthelongerterm,moreover,ithasalsobeensuggestedthataswagedifferentialsbetweenChineseworkersandthoseinotheremergingeconomiesreduce,theremayarelocationofmanufacturingtowardsLatinAmericaand,inparticular,toMexicowithitscloseproximitytotheUnitedStates.Moreimmediately,however,withmostoftheEurozonenowinrecessionthecurrentconcernisthatthisislikelytohaveadirectimpactonmaritimetradeastheimportofChineseproductsisreduced.
Ontheregulatoryfront,AsiannationsgenerallyhaveatrackrecordofbeinglessinclinedtowardstheadoptionofunilateralshippingregulationsatvariancewithinternationalstandardsagreedbyIMO.However,oneissuethatICShasbeenfollowingcloselyhasbeentheChinaPollutionRegulations.TheRegulationscameintoeffectin2010andintroducednewoperationalandliabilityrequirementsforshipowners.Implementationoftherequirement
tocontractwithlocalShipPollutionResponseOrganisations(SPRO)inordertoenterChineseportscommencedfrom1January2012andwasenforcedinallportsfromMarch.InNovember2011,attheinvitationoftheInternationalGroupofP&IClubs,ICSandrepresentativesoftheChinaandHongKongShipowners’AssociationsmetwiththeChineseMaritimeSafetyAgencyinBeijing.Shipowners’concernsabouttheabilitytocomplywiththerequirementtopre-contractwithanapprovedSPRObytheinitial1January2012implementationdatewereconveyed,alongwithconcernsabouttheveryhighSPROretainerfeesthathadbeenquoted.Theinitialimplementationprocesshasbeenproblematicbutitishopedthatitwillbesmoothergoingforward.
ItisgenerallyacceptedthatthecentreofgravityoftheshippingindustryismovingtowardsAsia.ApositivedevelopmentisthatAsianmaritimeadministrationshavebecomeincreasinglyconfidentandarticulatewhenpresentingtheirviewsatforasuchasIMO,notleastonissuessuchastheregulationofCO2.Inparticular,ICShasfoundcommongroundwithChinawithrespecttoitsemphasisonefficiencyimprovements,asopposedtosettingabsolutetargetsforemissionreductionsasfavouredbytheEU.IndiahasalsomadeanimportantcontributiontothedebatebywarningofthedangersofCO2regulationbeingappliedasaformofgreenprotectionism.Inawelcomemove,inDecember2011,IndiaratifiedAnnexVItotheMARPOLConventiongoverningatmosphericemissions,whichalsoincludesthetechnicalandoperationalmeasuresforCO2reductionagreedbyIMOinJuly2011.
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Asreportedelsewhere,ICShaswelcomedthepragmaticapproachofAsianauthoritiestowardsthedevelopmentofmaritimecompetitionregulation.Thisincludestheadoption,inJune2011,ofguidelinesconcerningnon-ratefixingagreementssuchasconsortia,bytheAsiaPacificEconomicCo-operationforum(APEC)whichisbecomingincreasinglyactiveonmaritimeissues.
ICScontinuestoenhanceitsgoodrelationswiththeAsianShipowners’Forum(ASF)whosemembershipcomprisesnationalshipowners’associations,manyofwhichalsobelongtoICS.Asasignofthisincreasingco-operation,ASFhasparticipatedinrecentmeetingswiththeConsultativeShippingGroup(CSG)ofmaritimeadministrationsorganisedbyICS,whiletheASFSecretaryGeneralnowattendsICSBoardmeetings.InMay2012,inAustralia,theASFAnnualMeetingwillforthefirsttimebeheldback-to-backwiththatofICS.
EUDevelopments
During2012,thesituationinEuropeisexpectedtobedominatedbythe
continuingcrisiswithrespecttothelongtermviabilityoftheEuro.ThishasbeenbroughtaboutbythedivergingeconomiccircumstanceswithinindividualEUMemberStates,notleastwithrespecttoincreasingunsustainablelevelsofsovereigndebt.EUleaders,innumerouscrisissummits,havesoughttorespondbyprovidingsupporttofailingeconomiessuchasGreece,aswellaspumpinghugeamountsofmoneyintotheEurozonebankingsectorasawhole.However,thejuryisstilloutonwhetherthe
singlecurrencywillweatherthestormandholdtogetherinthelongerterm.WhilethecurrentrecessionintheEurozonewillalmostcertainlyhaveanegativeimpactonglobalshippingmarkets,iftheEurozonecrisisworsenstheeffectontheworldeconomycouldbeveryseriousindeed.Moreimmediately,however,theEuropeandebtcrisisalsomeansthatamajorsourceofshipfinancinghasvirtuallydriedup,withmostofthemajorshippingbanksbeinglocatedinEurope.
DespitethepoliticalandeconomicturmoilinEurope,theEUinstitutionsremaincommittedtotakingforwardtheiragendawithrespecttomaritimeregulation.Inco-operationwiththeEuropeanCommunityShipowners’Associations(ECSA),ICSseekstoensurethatproposalsinEuroperemaincompatiblewiththeglobalmaritimeregulatoryframeworkwhichtheshippingindustryrequires.
NotwithstandingIMO’sachievementinadoptingapackageofinternationalregulationstoreduceshipping’sCO2emissions,theEuropeanCommissionisproceedingwiththedevelopmentofregionalmeasuresforshippingintheeventthatIMOisunabletoreachagreementonMarketBasedMeasures.Whilethisdecisionisdisappointing,thetimescalefortheimplementationofsuchmeasuresisbelievedtobefiveyears,andtheCommissionisunderstoodtoremainseriousinitspreferenceforaglobalsolutiontobeagreedatIMO.Nevertheless,inconsultationwithECSA,ICShassubmittedcommentstoaformalconsultationbyDGClimateAction,disputingtherationaleforaregionalregimeandreiteratingoppositiontotheinclusionofshippingintotheEUEmissionsTradingScheme(ETS).Inpublic,theEuropeanCommissionis
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RepresentingtheGlobalShippingIndustry
stillopenmindedaboutapplyingtheETStoshipping.Buttheapplication,inJanuary2012,ofaregionalETStointernationalaviation,hasnotbeenapleasantexperiencefortheCommissionwhichhashadtofacevigorousoppositionfromtheUnitedStatesandChina,amongstothers,whohaveindicatedtheymaytakeretaliatorymeasuressuchascancellingordersforEuropeanaircraft.ItremainstobeseenwhethertheEUwillbackdownwithrespecttoaviation,butifitshoulddosoitisdifficulttoseehowanETScouldthenjustifiablybeappliedtoshipping,whichunlikeaviationalreadyhasaninternationalagreementinplacethatwilldramaticallyreduceemissions.
AsdiscussedelsewhereinthisAnnualReview,otherimportantEUfilesinclude:thedraftDirectiveontheimplementationoftheIMOregulationsonsulphuremissions,whichmayincludetheextensionofEmissionControlAreas;itsresponsetothe‘CostaConcordia’cruiseshipdisaster,andtheimplementationoftheEUPassengerLiabilityDirective;andtheongoinginvestigationbytheCompetitionDirectorateoftheInternationalGroupofP&IClubs.ThecontinuingcommitmentoftheEUtocounter-piracyoperationsintheGulfofAdenisalsomostimportantandisgreatlyappreciatedbytheinternationalshippingindustry.
AnothermostimportantissueisthecurrentreviewoftheEUStateAidGuidelinesfortheMaritimeSectorwhichwilldecidewhethertopermitthecontinuationoftonnagetaxregimesinEurope.ThereviewisimportantbecauseEUtonnagetaxschemeshaveprovidedamodelforsimilarregimesthatarenowappliedbygovernmentsthroughoutthe
world,andarevitalforshippinginorderforittooperateinwhatarevolatileandhighlycyclicalglobalmarkets.However,thereviewiscomplicatedbecauseitisbeingoverseenbytheCompetitionDirectorateratherthanDGMOVEashaspreviouslybeenthecase,theformerperhapsnotbeingsofamiliarwiththeuniquecircumstancesthatapplytoshipping.AttherequestofECSA,ICSisthereforesubmittingcommentstotheCommissioninfavourofthemaintenanceofthestatusquo.
USDevelopments
UnlikeEurope,theUSeconomyisshowingsignsthatitisbeginning
torecover,althoughwhetherthiswillbesustainedfarbeyondthePresidentialelectioninNovember2012isunknown,asistheextenttowhichthiswillfeedintoincreasingdemandforshipping.AninterestingdevelopmentisthattheUnitedStatesisgraduallyreducingitsdependencyonforeignenergysuppliesasitdramaticallyincreasesitsexploitationofshalegas.InNovember2011,theAdministrationalsoannounceditsproposedfive-yearplanforoffshoreoildrillingwhichcalledfortheopeningofnewareasintheGulfofMexicoandAlaska.Anotherinteresting‘knownunknown’istheimpactthattheexpansionofthePanamaCanal(whichisduetobecompletedin2014)willhaveonUSshippingtrades,especiallycontainers.Inviewoftherun-uptothePresidentialelections,legislativeactivitywithinCongressisexpectedtobelimited,althoughUSFederalregulatoryagenciesstillhaveafullagenda,whileindividualUSStates
continuetoseektoimplementrulesatvariancetobothFederalandinternationalrequirements.Indeed,onecharacteristicoftheObamaAdministrationthathasbeenasourceoffrustrationforshippinghasbeentheapparentreluctanceofthecurrentUSAdministrationtodefendFederalregulationsfrominfractionsbyUSStates.ApositivedevelopmentinApril2012wasthepublicationbytheUSCoastGuardofitsfinalrulemakingonballastwatertreatment,whichadoptsa‘killstandard’formarinemicro-organismswhichmatchesthatadoptedintheIMOBallastWaterManagementConvention.However,seriousquestionsremainastowhethertheUSstandardsfortypeapprovalofequipment(inlinewithitsEnvironmentalTechnologyVerificationProgram),ortheballastwatersamplingstandardsthatwillbeusedtoinspectshipstradingtotheUS,willbeconsistentwiththoseexpectedtoadoptedbyIMOin2013.ThedoorisalsostillopenfortheCoastGuardtointroducemorestringenttreatmentstandardsifitisestablishedthatthetechnologyhasbecomeavailableinthefuture,whichwillbeofconcerntothoseshipownersinvestingmoneyintoexpensivetreatmentequipmentnow.Moreover,theproblemremainsofsomeindividualUSStatesstillconsideringtheimplementationoftreatmentstandards100timesmorestringentthanwhathasbeenagreedatIMOandforwhichtheequipmentrequiredsimplydoesnotexist.
ICSisalsoengagedintheongoingsagaofCalifornia’sunilateralairpollutionrules,whichincontraventiontoUNCLOSapplytoshipswithin24milesoftheUSCoastevenifnotcallingataCalifornian
port,andarestillsubjecttolegalchallengebythePacificMaritimeAssociation.However,followingUSratificationoftheIMOMARPOLrequirementsonsulphuremissionsfromships,itishopedthatthetemptationforindividualUSStatestodeveloptheirownenvironmentalruleswilldiminish.
AparticularexampleofunwelcomeregulationadoptedbyanindividualUSStateisthatadoptedbyMassachusetts.ThisstipulatesthatvisitingtankersthatdonotelecttocomplywithcertainadditionalrequirementswillbesubjecttofinancialliabilitiesinexcessofthosesetoutinFederallawintheeventofapollutionincident.TheissueforICShasbeenoneofprinciple,duetotheencouragementthatthiscoercivelawmightgivetootherUSStatestotaketheirownunilateralactions,whichwillresultinconflictingregulations.Inco-operationwithotherindustryassociations,ICShasthereforebeeninvolvedwithalegalchallenge.TheintentionoftheactionwastomaketheUSCoastGuarddefenditsownregulations.Disappointingly,however,theCoastGuardhassofarshownlittleinterestindoingthisforwhatareprincipallyassumedtobepoliticalreasons.
TradeSanctions
Oneofthemajorpoliticaldramasbeingenactedin2012istheactionbeingtakenbytheinternationalcommunityinresponsetoIran’snuclearprogramme.Inaworstcasescenario,tensionintheMiddleEastcouldleadtoclosureoftheStraitsofHormuzthroughwhichsomuchoftheworld’soilpasses,withdramaticeffectsonoilpricesandtherecoveryoftheworldeconomy.However,theimmediatepreoccupationforICS
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RepresentingtheGlobalShipping
Industry
RepresentingtheGlobalShippingIndustry
hasbeenthechallengepresentedbysanctionslegislation.
Inco-operationwiththeInternationalGroupofP&IClubs,ECSAandtheChamberofShippingofAmerica,ICShassoughttoprovideinformationvianationalassociationsabouttheimpactonshippingcompaniesofsanctionsagainstIranannouncedbytheEuropeanUnionandtheUnitedStates.Itremainstobeseenwhetherotherimportanttradingnationswillintroducesimilarsanctions.
Thereisundoubtedlyaneedforgovernmentstoprovidegreaterclarityanduniformitywithrespecttotheapplicationofsanctions,whetherinthecontextofIranorothernations,suchasSyria,towhichtheymightbedirected.Thesituationisnothelpedbythefactthatgovernmentsnodoubtwanttheirsanctionslegislationtobeasambivalentandflexibleinitsinterpretationaspossible,inordertofurthertheirforeignpolicyobjectives.ThesanctionssofarenactedagainstIranhaveanimpactfarbeyondEUorUSoperators,evenforshipsflaggedinandtradingtocountriesoutsidetheEUandUS.Thisisbecausemostmarineinsurance(andreinsurance)isbasedinLondon;whileUSlegislationwillpreventtankeroperatorsthatcallinIranfromtradingtotheUS.
AlthoughmanyquestionsraisedbyshipownershavebeenaddressedbyextensiveadviceproducedbytheInternationalGroupofP&IClubs,thereisstillsomeuncertaintyastotheprecisescopeofthesanctions,particularlywithregardtotheirimpactoncompulsoryinsurancecoverasrequiredbytheCivilLiability(CLC)andBunkersConventionsforoilpollution.
ThenewEUsanctionsannouncedinJanuary2012extendtothecarriageofpetrochemicalproductsandcrudeoil,andwillfullyapplytoanyexistingcontractsfromMayandJulyrespectively.TheseactuallybuilduponprevioussanctionsrelatingtoanyitemsthatmightassistIran’snuclearprogrammeintermsoftheterritoryandtheentitiestowhichtheyapply.Inshort,thesanctionsapplytoshipownersincorporatedordomiciledinEUnations,toshipsregisteredinorflyingtheflagofanEUMemberState,andtoallvessels,regardlessofplaceofregistration,whichtradetoEUports.
However,theEUsanctionsalsoapplytoinsurerswithintheEU,prohibitingthemfromissuingormaintaininginsurancewithregardtoanysanctionableactivityortrade.TheythereforeapplytoP&IClubs(andtheirreinsurers)aswellastohullinsurers(andtheirreinsurers),whichareincorporated,domiciledorregulatedwithinanEUMemberState.MostP&IClubs,andalargeproportionofhullinsurers,arelocatedinEurope,whilemostreinsuranceisprovidedinLondonorintheUnitedStates,whereitwillalsobeaffectedbytheUSsanctions.
WithspecificregardtothirdpartyliabilityinsuranceprovidedbytheInternationalGroupofP&IClubs(IG),theEUsanctionswillalsoaffectvesselsthatwouldotherwisefalloutsidethejurisdictionofEUMemberStates,evenifsuchvesselshavetheirP&Iinsurancewithanon-EUregisteredP&IClub.ThisisbecausesuchaClub(ifanIGmember)willbeunabletoobtainaccesstoreinsurancefromtheEUbasedClubsviatheIGPoolingAgreement.Anon-EUClubwillalsobeunabletoaccessmarket
reinsurancecoverfromotherEUbasedreinsurers.
AllInternationalGroupClubshaveincludedintheirrules,inoneformoranother,eitherexpresssanctionstocoverterminationorexclusionprovisionsforimprudentorimpropertrading.Theeffectoftheserulesistowithdraworexcludecoverinrelationtosanctionsoffendingvoyages.Inotherwords,ifashippingcompanyundertakessuchavoyageitsliabilitieswillnotbeinsuredbytheInternationalGroup.
ThisrestrictionwillthereforealsohaveanimpactonanycompulsoryinsurancecertificationrequiredbyIMOConventions(whilepaymentforliabilitiesthataresubjecttocompulsoryinsurancemayalsobecaughtbytheprohibitionsinthesanctions).Asaconsequence,shipownersinbreachofsanctionsmayalsobeviolatingflagstatelaw,eveniftheflagstateisnotconnectedwiththeEU.Aswellasmonetaryfines,penaltiesmayincludedetentionofthevesselandsuspensionofthevessel’scertificateofregistry.
InApril2012,itwasstilluncertainwhattheexactscopeofthesanctionswouldbe.However,theconcernremainsthatthoseresponsiblefordevelopingsanctionspolicymayhavelittleunderstandingofthewiderconsequencesforshippingandtrade,manyofwhichmaybeunintended.
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LLMCIncreases
InApril2012,theIMOLegalCommitteeagreedsignificantincreasestothelimitsofliabilityundertheLimitationofLiabilityforMaritimeClaimsConvention1996(LLMC).UndertheIMO‘tacitamendment’procedure,the51%increaseswillcomeintoeffectin2015.Inadditiontogeneralmaritimeclaims,theLLMClimitsalsoapplytoclaimsunderIMOConventionsgoverningliabilitiesforbunkerspills(otherthanclaimscoveredbytheCivilLiabilityConvention)andwreckremovaloncetheNairobiConventionentersintoforce.
TheincreasesweremadeattheinitialrequestofAustraliainresponsetothe‘PacificAdventurer’bunkeroilspillinQueenslandin2009wheretheclean-upcostswerethoughttohaveexceededtheapplicablelimitationamount.Australiahadsupportfrom20co-sponsoringnations,whichmeantthatthefactthelimitswouldbeincreasedwasprobablyneverindoubt.Intheeventtherealdebatewasaboutthequantumoftheincreases.Australiahadmadeitclearfromtheoutsetthatitwasseekingthemaximumamountpossibleviathetacitamendmentprocedure,namely6%peryearcalculatedonacompoundbasisfrom1996.However,Japanwasfirmlyoftheviewthattheincreasesshouldnotbehigherthantherateofinflationduringtherelevantperiod(some2.7%peryearcompounded).
ThroughoutthedebateatIMOoverthepasttwoyears,ICSobservedthattheindustrywasopentoadiscussionofincreases,butthatthesehadtobebasedonthecriteriaspecifiedinthe‘tacitamendment’procedure,namely
RepresentingtheGlobalShippingIndustry
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theclaimshistory,inflation,andtheeffectonthecostofinsurance.
SomenationscontinuedtoexpressdoubtastowhetheranyincreaseswerejustifiedinviewofthestatisticscompiledbytheInternationalGroupofP&IClubs.Theseshowedthatonlyasmallnumberofclaimshadnotbeencompensatedfullyunderthepresentlimits.TherewasalsoarobustdiscussionabouthowinflationshouldbecalculatedwithmanystatessupportingtheJapaneseposition.Itwasacknowledgedthatitwasnotpossibletoquantifytheeffectofincreasedlimitsoninsurancepremiumsbecausethatwoulddependonfutureclaims.Butifamajorincidentnowoccursthatissubjecttothehigherlimits,thenthisislikelytobereflectedinincreasedpremiumssoonafterwards.ICSbelievesthatthefinalincreasesagreedbyIMOareareasonablecalculation.Itremainstobeseenwhateconomicimpactthenewlimitswillhaveontheindustryaftertheycomeintoeffectin2015.However,itistobehopedthattheincreaseswillensurethattheprincipleoflimitationofliabilitywillbemaintained,whichisvitalifshipownersaretocontinuetohaveaccesstoaffordableinsurance.ItisalsohopedthatthenewlimitswillnotdeterlessdevelopednationsfromsubscribingtotheLLMC.
PassengerShipLiability
Questionsrelatingtopassengerliabilityinsurancearelikelytoreceiveadditionalattentionasaresultofthe‘CostaConcordia’cruiseshiptragedy.However,theimmediatefocusofICSistheimplicationsoftheentryintoforceofthe2002ProtocoltotheIMOAthensConvention(whichisexpected
soonfollowingratificationbyEUMemberStates)notleasttheneedforcertificationofinsurancecoverforterrorismandwarrisks.
Inco-operationwithECSA,andtheInternationalGroupofP&IClubs(IG),ICSisalsoseekingtoaddressthesimilarproblemsthatmayariseasaresultoftheenforcementoftheEUPassengerLiabilityRegulation(PLR)withwhichshipoperatorsmustcomplyfrom31December2012,andwhichbroadlymirrorstheIMOAthensProtocolrequirements.
Theissuesarecomplex,butthethornyissueofterrorismcoverhashamperedimplementationoftheIMOProtocolsinceIMOMembersStatesfirstrejectedindustryargumentsthatterrorismisanattackonsocietyatlargeandthatthecostsshouldthereforebebornebygovernments.InsteadIMOdecidedthattheprovisionofsuchcovershouldbelefttothemarket.
ThepotentialliabilitiestowhichtheClubsmightbeexposedundertheAthensProtocolarehuge,perhapsinexcessofUS$5billionpershipinaworstcasescenario.TheP&IClubscommunicatedtheirdifficultiesinprovidingcoverforterrorism(whichcouldhaveimplicationsfortheinsurancetheyprovidetonon-passengershipping)andacompromisewasarrivedatbytheIMOLegalCommitteein2006,wherebycoverforterrorismcouldbelimitedtoUS$500million.However,thisIMOcompromisewasunderpinnedbyaschemeproposedbytheinsurancebrokerMarshLtd.WhileMarshhasadviseditsschemewillbeupandrunningintimefortheapplicationoftheEUPLRattheendof2012,questionsaboutthescheme’sviability
continue,anditisstillunclearwhattherateswillbeandwhetherlargershipswillbecovered.
AlthoughtheIGP&IClubshavenowdecidedtoissuecertificatesofinsuranceforthenon-warrisksarisingundertheEUPLRandtheIMOAthensProtocol,theyhaveyettodecideontheprovisionofIGClubcoverforthewar/terrorismrisks.
InOctober2011,ICSmetwithEUgovernmentstoobtaintheirviewsonthestructureoftheinsurancevehicleproposedbyMarshLtd,andfromthelimitedresponsesreceiveditwouldseemthatgovernmentswillacceptit,notwithstandingthepracticaldifficultiesthatmightariseforclaimantsintheaftermathofacasualty,suchastheneedtodealwithamultiplicityofinsurersfortheirindividualindemnities.Thegovernments’approachappearstobeguidedbyageneralunderstandingthatsuchcovermightnotbeavailableelsewhereandthatthisisthebestthatcanbeobtainedfromthecommercialmarket.Butitisuncertainwhethertheyarefullyaufaitwithallofthepotentialcomplexitiesinvolved
Giventhecomplicationofhavingtohaveseparateterrorismcover,theindustryistryingtopersuadegovernmentstodevelopacommonpositionwithregardstoportstateacceptanceofinsurancecertificates.ICSandECSAarealsoencouraginggovernmentstoensurethatwhenratifyingtheAthensProtocoltheymaketheimportantreservation,asagreedandrecommendedbyIMO,withrespecttoshipowners’liabilityforwarandterrorismrisks.However,somedetaileddiscussionswillbeneededbetweennowandtheendoftheyear.
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EnvironmentalSalvageAwards
Inco-operationwiththeInternationalGroupofP&IClubs,ICScontinuestoleadshipownerrepresentationonsalvageissues,particularlyinrelationtothesmoothoperationoftheLloyd’sOpenFormandSCOPIC(specialcompensation)regime.
ICSismaintainingitsfirmoppositiontoproposalsfromtheInternationalSalvageUnion(ISU)foranewseparateawardfor‘environmentalsalvage’whensalvorshavecarriedoutoperationsinrespectofashiporcargowhichhaspresentedathreatofdamagetotheenvironment.ICSisdeeplyscepticalabouttheproposal,believingthatsalvageservicesarealreadygenerouslyrewardedunderthepresentsystem.
AworkinggroupestablishedbytheLloyd’sSalvageGroup,inwhichICSparticipates,hasreachedastalematefollowingtheISU’sinabilitytodemonstratethatitsproposalwouldimprovesalvageresponse,ordelivercostsavingstothosepayingforsalvageservices.However,theISUhassucceededinpersuadingtheComitéMaritimeInternational(CMI),theinternationalassociationofmaritimelawyers,togiveconsiderationtoitsproposalsforarevisionoftheIMOConventiononSalvageandalsotoamendtheLloyd’sOpenForm(LOF).
Despitethelackofindustryconsensus,aCMIworkinggrouphasalreadystartedworkonpossibleamendmentstotheLOF.ICSregardsthisdevelopmentwithparticulardismaysinceitappearstoinvolvethediscussionofproposalstoamendwhatineffectisaprivatecontractwithouttheinvolvement
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ofatleastoneoftheparties,whilstbypassingthelongstandingforumalreadyestablishedtocarryoutsuchworkwhichistheLloyd’sSalvageGroup.InMarch2012,ICSandtheInternationalGroupofP&IClubswroteformallytoCMI,settingoutshipowners’concernsinthestrongestpossibleterms.
TheISU’sproposalswithrespecttoenvironmentalawardswillbediscussedfurtherattheCMIConference,inBeijing,inOctober2012atwhichICSwillberepresented.GiventhatCMIdoesnotplantoinvitedetailedpresentationstobemadeontheseissuesbyalloftheinterestedparties,itisoftheutmostimportancethatthereportoftheCMIworkinggroupisasbalancedaspossibleandreflectsthedivisionwithintheindustry.TheCMIshouldalsobearinmindthatamendmentstoIMOConventionshavetobeproposedbygovernments,andthattheIMOLegalCommitteeisunlikelytoentertainproposalsthatfailtodemonstrateanycompellingneed.
ICSdoesnotbelievethattheproposalsconcerningenvironmentalsalvageenjoythesupportofmostnationalmaritimelawassociations,andinMarch2012ICSpublishedadetailedpositionpaperreiteratingtheargumentsastowhytheyshouldnotbesupported.
RotterdamRules
ICScontinuestopromotetheratificationoftheRotterdamRulesoncargoliabilitywhichwereformallyadoptedin2009bytheUnitedNationsCommissiononInternationalTradeLaw(UNCITRAL).TheRotterdamRulesareintendedtoreplaceoutdatedcargoliability
regimessuchastheHamburgandHague/VisbyRules,takingaccountofmodernmulti-modaltransportand‘doortodoor’deliverypractices.
ICSrecognisesthatthenewrulesmaynotbeperfect,andinsomerespectsareoverlycomplex.However,maintenanceofthestatusquoisnotarealisticoption.IftheRotterdamRulesdonottakeholdthentheUnitedStatesandtheEUwillalmostcertainlypursuetheirownregionalregimesandtheopportunityforglobaluniformitywillbelostforanothergeneration.FollowingathoroughanddetailedanalysisoftheRotterdamRules,ICSmembershavethereforeconcludedthatthenewregimemustbestronglypromotedbytheshippingindustryinordertoavoidtheriskofaproliferationofregionalcargoliabilityregulations.
Encouragingly,theUnitedStatesappearstobecommittedtotheearlyratificationoftheConvention.WiththefullsupportofUScarriersandshippers,theStateDepartmenthaspreparedafiletobeputbeforeCongresswhichisexpectedtotakethisforwardafterthe2012PresidentialElection.Thiswillalmostcertainlygivecriticalmomentumtotheprocessofratificationworldwide,withChinaandotherAsiannationslikelytowishtoaligntheirregimeswiththeUS.Meanwhile,althoughsomepartsoftheEuropeanCommission,whomayhavebeeninfluencedbytheEuropeanShippers’Council(ESC),havebeenambivalentabouttheUNCITRALConvention,forthemomentatleasttheEUhasputasideplansforaregionalcargoliabilityregime,andmanyEUStatesareproceedingtowardsratification.Moreover,thedoubtsabouttheRotterdamRulesdisplayedbytheESC
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arenotsharedbytheGlobalShippers’ForumwhichembracesUSandAsianshippers.Whilethosewhoweredeeplyinvolvedinthenegotiations,suchasICS,areclearabouttheneedtoencouragegovernmentstoratifyandimplementtheRotterdamRules,therestillappeartobereservationsinsomequarters,includinginAsia,aboutthebenefitsofthenewregime.AnongoingpriorityforICS,inco-operationwithlocalnationalassociationsandbodiessuchastheAsianShipowners’Forum,istoexplaintotheseinterestswhytheRotterdamRulesshouldbesupported.
CompetitionIssues
Compliancewithcompetitionlawismostimportantgiventhateven‘technical’violationsbyshippingcompaniescanresultinpenaltiesamountingtotensofmillionsofdollars.InMay2011,mostofthemajorinternationalcontainerlineswerepresentedwithasharpreminderofthiswhentheEuropeanCommissionlaunchedadawnraidonnumerouscompanyoffices.Apparentlythiswastoestablishthatitsmajorshake-upofcompetitionrulesin2008isbeingfullycompliedwith.ItisunderstoodthattheEuropeanCommissionwasnotrespondingtoanyparticularcomplaint;noristherereasontobelievethattherehasbeenanynon-compliance.(However,inMarch2012,theEuropeanCommissionalsodemonstrateditspowerbyfining14internationallogisticscompanies,includingUPSandKuehne&Nagel,€169millionforcollusionwithrespecttosecuritysurcharges.)
Theabovenotwithstanding,in
thosepartsoftheworldwheretheyarestillpermitted,ICSpolicyistodefendthecontinuedexistenceoflinerconferencesandothersimilarexemptionstocompetitionlawsuchasdiscussionagreements.TheEUCompetitionDirectorate,however,continuestoargueforcefullythatitsforeigntradingpartnersshouldfollowitsunilateralexampleofmakingshippingcompanies’participationinsuchmechanismsillegal.
ICShasthereforewelcomedthepublication,inFebruary2012,bytheUnitedStatesFederalMaritimeCommission(FMC)ofitsdetailedstudyoftheimpactoftheEUprohibitiononUStrades.ManyoftheFMC’sconclusionsappeartosupporttheICSpositioninfavourofthemaintenanceofthestatusquowithrespecttocurrentantitrustimmunitythatappliesinnon-EUtrades.Basedonitsexaminationoftheperiod2006-2010,theFMChasconcludedthattherepealoftheEUBlockExemptionhasapparentlynotresultedwithanyrelativedeclineinEUfreightratescomparedwithFarEast/UStrades.Inotherwords,shippersinEUtradeshavenotbeenadvantagedasaresultoftheEUdecisioncomparedtoshippersinFarEast/UStradeswheretheEUprohibitiondoesnotapply.TherealsoappearstohavebeenanincreaseinratevolatilityinEUtrades,comparedtoFarEast/UStrades,andtheFMCsuggeststhattheactivitiesofdiscussionagreementsthatarestillpermittedinnon-EUtradesmayhavehada‘dampeningeffect’onratevolatility.
ABillintroducedtotheUSCongressin2010proposedremovalofmuch
oftheantitrustimmunitywhichisstillenjoyedbytheinternationallinerindustryinUStrades.Fortunately,thisBillisnowdeadandlittlefurtheractionisanticipateduntilafterthePresidentialelectionsinNovember2012.TheFMChasreachednofirmconclusionsastowhetheranychangesarewarrantedwithrespecttocurrentUScompetitionregulationssuchastheOceanShippingReformAct.However,theFMCstudydoesseemtoprovideevidenceinsupportofmaintainingthestatusquoshouldtherebefurthercallsfortheUStofollowtheexampleofEurope.
Meanwhile,inAsia,followingonfromthedecisionbySingaporethatitsblockexemptionfromcompetitionrulesforlinershippingagreementswillbeextendeduntil2016,ICShaswelcomedthesimilardecisionbyJapan,inJune2011,tomaintainitsAntitrustImmunitySystemuntilatleast2015.JapanhasalsoconcludedthattheEUrepealofantitrustimmunityhasledtoincreasedvolatilityoffreightratesinEuropeanlinertrades,aswellasariseinsurchargesleviedbyindividualcarriers.Inaddition,theJapanesegovernmentwasconcernedthatthedrasticrationalisationoflinerservicesbyindividualcarrierswhichhasensuedsincethedownturn,andwhichhasresultedwithareductionofavailableservices,waspartiallyaresultofthelines’reducedabilitytoco-operate.ICShaswelcomedtheagreementbytheAsiaPacificEconomicCo-operationforum(APEC),inJune2011,onguidelinesonmaritimecompetitionrules,specificallyforco-operationagreementswhichdonotinvolveratesetting,suchasconsortia.Althoughafarlooserformofco-operationthanconferences,
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consortiahaveprovidedstabilitytomarkets,helpingguaranteethemaintenanceofscheduledservicestomoreremotedestinationsandpermittingefficienciessuchasslotsharingoncontainerships.Inparticular,consistentwithargumentspresentedbyICS(andtheWorldShippingCouncil)atanearlierAPECconsultationmeetinginTokyo,ICShaswelcomedtherecommendationthatfilingrequirementsshouldbelefttothediscretionofindividualgovernments,sincethesearecommonlyrequestedbythosegovernmentswhichcontinuetoallowamoreflexibleapproachwithregardtoco-operationbetweenshippingcompanies.
AnumberofotherAsianjurisdictionsarealsoreviewingtheapplicationofantitrustlawtoshippingaspartoftheirdevelopmentofgeneralcompetitionlaw.ThelatestcountrytodothisisNewZealand.InSeptember2011,ICSsubmittedcommentstotheNewZealandProductivityCommissionandurgedtheNewZealandgovernmenttoconsiderthemaintenanceofpracticespermittedintherestoftheAsia-Pacific.
InJanuary2012,NewZealandreleasedadraftreportofitsenquiryintointernationalfreighttransportserviceswhichrecommendsthatitsexemptionforratemakingorcapacitylimitingagreementsberepealed,butthattheexemptionfornon-ratemakingactivitiesshouldberetained,conditionalonfilingtheagreementswiththeMinistryofTransport.
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ECInvestigationofIGofP&IClubs
ICSfirmlybelievesthatthecurrentsystemofmutualthirdpartyliabilityinsuranceprovidedbytheInternationalGroupofP&IClubs(IG)continuestoservethebestinterestsofshipoperatorsandtheircustomersextremelywell,alongsideservingtheinterestsofclaimantsandthegeneralpublic.Inparticular,themutualinsurancearrangementsprovidedbytheClubsenabletheprovisionoftheveryhighlevelsofinsurancerequiredunderinternationalliabilityconventions,underwhichcompensationtoclaimantsisgenerallypaidregardlessoffaultandwithoutlegalwrangles.
ICSisthereforecloselyfollowingtheEuropeanCommission’sinvestigationsoftheactivitiesofthe
IG,theCommissionhavingopenedformalproceedingsin2010.TheCommissionhadstatedthatitwassimplyconductinganinvestigation,andthatthisdidnotimplythattherewasanyproofofinfringement.TheCommissionhadalsoadvisedthatithadopenedtheinvestigationonitsowninitiativeandthatithadnotreceivedanyformalcomplaints.
ItwasoriginallyunderstoodthattheCommissionwishedtoexaminewhethercertainprovisionsoftheIGAgreementandPoolingAgreement,notablytheGroup’sclaimssharingandreinsurancearrangements,mightsomehowlessencompetitionbetweentheClubsorrestricttheaccessofcommercialinsurersorothermutualP&Iinsurerstotherelevantmarkets.InbilateraldiscussionswiththeCommission,ICSandECSAhave
thereforeemphasisedthatthemutualinsurancearrangementsprovidedbytheP&IClubsareefficientandcosteffective.Fortheirpart,theCommissionofficialswhoweretheninvolvedhadstressedthattheywerenotintentondestroyingthesystembutwereinterestedinthequotationprocedure,releasecalls,andtheavailabilityofcommercialP&IinsuranceoutsidetheInternationalGroupsystem.
In2011theCommissionsentoutquestionnairestoindividualshippingcompaniesseekingfurtherinformationontheapplicationoftheIGAgreement,andalsorequesteddetaileddocumentationandinformationfromtheIGClubs.However,developmentshavebeenmuchslowerthanexpected,apparentlyduetotheappointmentofanewteamofcasehandlers.
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FlagStatePerformance
Inaglobalisedindustrysuchasshipping,thereisnothinginherentlywrongwitharegulatorysysteminwhichtheflagwhichashipchoosestoflyisdifferenttothecountryofbeneficialownership.Inparticular,ICSbelievesthatgeneraliseddistinctionsbetweentheperformanceofopenregistersandsocalledtraditionalmaritimeflagsareneitherhelpfulnorrelevant.Pejorativetermssuchas‘flagsofconvenience’havemoretodowithindustrialrelationsissuesofthe1980sthanthesituationwhichpertainsto2012.FlagstatessuchasBahamas,Liberia,HongKongandSingaporeareamongsttheverybestperformersintermsoftheirimplementationofIMOandILOrequirementsandportstatecontrolinspectionrecords,whiletheownershipprofileofmanyOECDshipregistersnowincludeslargenumbersofforeignownedshippingcompanies.
Nevertheless,ICSbelievesthatabalancehastobestruckbetweenthecommercialadvantagesofshipownersselectingaparticularflagandtheneedtodiscouragetheuseofanyshipregisterthatdoesnotmeetitsinternationalobligations.Whileitisshippingcompaniesthathaveprimaryresponsibilityforthesafeoperationoftheirshipsitistheflagstatethatmustenforcetherules.
ICShasthereforebeenastrongsupporteroftheIMOMemberStateAuditSchemeandhaswelcomedthedecisionbyIMOfortheauditstobecomemandatoryin2014,oncethefirstroundofvoluntaryauditsiscomplete.InMarch2012,IMOfinalisedadraftofitsIMOInstrumentImplementationCode,whichwillunderpinthemandatoryschemesubjecttoadoptionbythe2013IMOAssembly.However,intheinterestsoftransparency,ICSbelievesthattheresultsoftheIMOauditsshouldbepublished,andthat,asaminimum,informationshouldbemadeavailablebyIMOastowhethermaritimeadministrationshaveactuallyputthemselvesforwardforinspection.Inthemeantime,ICShaswelcomedthedecisionofsomeofthemajorregionalportstatecontrolauthoritiestorequestinformationastowhetherauditshavebeenconductedaspartoftheircriteriafortargetinginspections.AsacomplementtotheIMOScheme,andasaservicetotheindustry,ICScontinuestoproduceitsannualShippingIndustryFlagStatePerformanceTablewhichcollatesvariousdataavailableinthepublicdomainandwhichcanbedownloadedfromtheICSwebsite.However,underthesupervisionofICS’smembernationalshipowners’associations,thepresentationofthe
Tablefor2011hasbeenmodifiedslightlyinordertoaddressfeedbackfromgovernments,includingcommentsattheIMOFlagStateImplementationCommitteewhichquestionedsomeofthecriteriausedbyICSandwhetherthedatamightbepresentedinamorepositivemanner.
However,thepurposeofthenewTableisthesame:toencourageshipownerstoexaminewhetheraflagstatehassubstancebeforeusingitandtoencouragethemtopressuretheirflagadministrationtoeffectanyimprovementthatmightbenecessary.ICSmakesnoapologyforcontinuingtosubjectflagstatestoscrutiny,inthesamewaythatshipsandcompanyproceduresarerightlysubjectedtoinspectionbygovernments.Theoverridinginterestinpromotinghighperformingflagsisthattheyarelesslikelytotoleratesub-standardoperatorswhowouldotherwiseenjoyanunfaircommercialadvantageoverthevastmajorityoffullycompliantshippingcompanies.
ShippingPolicyandFreeTrade
Forthepastfouryearstheshippingindustryhasbeenconfrontedwithunprecedentedeconomicturmoil.Muchoftheindustryisstillstrugglingwiththeseriousconsequencesofatrulymassivecontractionineconomicactivity,withglobaltradeestimatedtohavedeclinedbynearly10%in2009.Whiletradepickedupalittle,especiallyinAsia,thelatestWorldTradeOrganizationprojectionsfor2012arenotverypositiveandoverallglobaltradeisprobablynotmuchimprovedonthelevelsthatexistedbefore2008.Thepracticeofsoundshippingpolicybygovernmentsisthereforeasimportantasever.
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ShippingpolicyinvolveslongtermengagementbyICSanditsmembernationalassociationsinthelargelyunseendiplomaticactivitynecessarytohelpensurethemaintenanceoftheopenmarketswhichtheshippingindustryneedstooperatecompetitivelyandefficiently.Shippingalsorequiresaregulatory‘levelplayingfield’and,inviewofthegreatmarketvolatilitybeingexperiencedduringthecurrenteconomicdownturn,thecontinuationofthecertaintyprovidedbythetonnagetaxregimesthatnowapplytoshippingcompaniesinmostcountries.InJune2011,ICSmadetheseimportantpoints(aswellashighlightingtheissueofSomalipiracy)asoneoftheleadingindustryparticipantsatamajorConferenceoftheworld’stransportministersinLeipzig,organisedbytheOECDInternationalTransportForum,whichhascontinuedtofocusontheimplicationsfortransportasitemergesfromtheeconomicdownturn.ICSwillagainberepresentingtheindustryatthenextOECDtransportministers’conferenceinMay2012.
Moreroutinely,ICScontinuestoplacegreatimportanceonrelationswiththeConsultativeShippingGroup(CSG)ofgovernments,whichistheguardianofmaritimefreetradeprinciples.InJune2011,inco-operationwithECSAandtheRoyalBelgianShipowners’Association,ICSheldaseminarontradepolicyforCSGgovernmentsattheirmeetinginBrussels.InconjunctionwithASFandtheSingaporeShippingAssociation,asimilareventwasorganisedinApril2012attheCSGmeetingheldinSingaporewhich,interalia,discussedthepossibletradeimplicationsof
marketbasedmeasuresforCO2emissions.
ICShascontinuedtogiveinput,vianationalassociations,onissuesrangingfromproblemsofmarketaccesstogovernmentinterferenceinlocalmarkets.TheCSGisalsoausefulconduitforthediscussionofsensitivediplomaticissues,suchasthetreatmentofpiracy.
InadditiontothebroaderroleoftheCSGasaforumfordiscussionofshippingpolicyandtradeissues,itstillmaintainsitsoriginalfunctionasprovidingameansfortheworld’smajorshippingnationstocommunicatewiththeUnitedStatesgovernment,whichhistoricallyhasoftenbeenslightlydetachedfromthemainstreamoftheinternationalshippingcommunity.ICSwillparticipateatthenextCSGdialoguemeetingwiththeUnitedStates,inWashingtonDC,inJune2012.AmajorconcernofICSnationalshipowners’associationshasbeentodiscouragegovernmentsfromrespondingtothecurrenteconomiccrisiswithprotectionistmeasures,whichwillonlydamageworldtradefurther.Moreparticularhasbeentheneedforgovernmentstoavoidmeasuresthatrestrictfairandopenaccesstoshippingmarkets.Acaseinpoint,whichreceivedcloseattentionin2011,wastheapparentattemptsbytheChineseauthoritiestorestrictaccesstoChineseterminalsfortheultralargebulkcarriersoperatedbytheBrazilianironoreproducerVale,althoughthisissuenowseemstohavebeensettledsatisfactorily.Likewise,whilstICShasnoopinionabouttheunderlyingissuessurroundingthefutureoftheFalklandIslands(Malvinas),any
restrictionsbyArgentinaonshipsthathavecalledattheislandswillbeofgreatconcernbecauseofthenegativeprecedentthatcouldbesetwithrespecttothemaintenanceofmaritimefreetradeprincipleselsewhere.
Althoughoflittleimmediatecomforttothoseindividualcompaniesthatmaystillbestrugglingtosurvive,oneconsolationisthatgovernmentssofarappeartohavemadeadeterminedefforttoavoidtheexcessiveuseofprotectionistmeasures,(althoughinearly2012somebackwardlookingmoveswereproposedwithintheEUwithrespecttogovernmentprocurement).Buttherecoveryoftheworldeconomyisstillfarfromcertain,anditwillremainimportantforICS,andlike-mindedgovernments,toremainvigilant.Inparticular,ICSremainscommittedtotheinclusionofshippinginanynewagreementonservicesthatmaybeagreedbytheWorldTradeOrganization(WTO),inordertocodifytheliberaltradingpracticeswhichalreadyapplytomostshippingmarkets.However,progresstowardsanewWTOdealontraderemainsslow,largelyduetosignificantdifferencesbetweengovernmentsonissuessuchasagriculture.
ShipbuildingPolicy
Shipping,ofcourse,istheservantofworldtradeandjustasitbenefitedfromtheboomyearsofthemid2000sitsfortunesarenowalsoinextricablylinkedtotherecentfallinthedemandforitsservices.Butmanyoftheproblemsconfrontingshippinghaveundoubtedlybeenexacerbatedbyshipownersplacingordersforfartoomanyships,withfartoofewcargoestocarry.With
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vastamountsofnewtonnagebeingdeliveredduring2012,inmanytradesthereisnowamajorglutofships.
Currentmarketswouldappeartobedemonstratingjusthowseriouslydamagingtheoversupplyofshipshasbeentoshipowners’revenues,withmanynowstrugglingtomeettheiroperatingcosts.However,theproblemsofindividualownersaside,thebiggestdangerperhapsistheovercapacitythatexistsintheshipyards,withanalmostobsessivecommitmenttomarketsharebeingdisplayedbythethreemajorshipbuildingnations:China,KoreaandJapan,where90%ofworldtonnageisbuilt.Evenifshipyardsgobankrupt,itislikelythattheirgovernmentswillstepinsothattheycancontinuetoproduceshipswhichfewpeoplewant,otherthanspeculatorswhomaybefoolishlytemptedbyknockdownprices.However,amarketmightbefoundforotherwiseunwantedChineseshipsbytheChinesefleetitself,withChinahavingawidelyrecognisedgoalofseekingtocarryamuchlargerproportionofitscargoes–perhaps50%-onboarditsownvessels.
ItisthereforeasourceofdisappointmentthattheOECDhasconfirmeditsdecisiontoterminatenegotiationsonanewagreementtoeliminatesubsidiesandmarketdistortingmechanismsintheshipbuildingindustry.ThiswasprimarilyduetodifferencesbetweentheEuropeanCommissionandAsiangovernmentsaboutthetreatmentofpricingofnewshipsinanynewagreement,thelatterwishinginsteadtoconcentrateontheeliminationofsubsidies-apositionsupportedbyICS.However,theOECDWorkingPartyonShipbuildingwillcontinue
tomeet,inordertoexplorefurtherwhatconstitutesmarketdistortionandthemeansofachievinggreatertransparencyongovernmentsupportmeasures.ICSwillattendameetingthatOECDisorganisinginParisinJune2012,withthegoalofencouragingtheresumptionofthetalksassoonaspossible,eveniflittleimmediatemovementisanticipated.Inviewoftheserioussupply/demandimbalancethatcurrentlyprevailsitisclearthatspeculativeorderingofshipsthathavenoeconomicpurposeshouldbediscouraged.Whatevermightseemrationalfromanindividualcompany’sperspectivemightnotbegoodwhenseeninthecontextoftheindustryasawholeandtheindividualcompaniesitcomprises.
However,onethingonwhichICSisclearisthatitwillresistanysuggestionthatallshipsaboveacertainageshouldautomaticallybescrapped.ICSwillcontinuetoresisttheconceptofamaximumageforshipswhich,aswellasdamagingthecommercialinterestsoflargenumbersofcompanies,wouldremoveincentivestomaintainoldershipsandwouldhavenegativeimplicationsforsafetyandenvironmentalprotection.
CanalIssues
ThePanamaandSuezCanalsreducethelengthofmanyseavoyagesbythousandsofmiles,buttheprivilegeofusingthemisexpensive.Individualtransitsbylargevesselscancosthundredsofthousandsofdollars.WhilebothCanalsarededicatedtoprovidingexcellentservicetheyarealsoverymuchcommittedtoprofitmaximisation.
ThecurrentAdministratorofthe
PanamaCanal,MrAlbertoAlemánZubieta,whohasbeenpivotalinoverseeingthecurrentCanalexpansionandstrengtheningliaisonwithindustryhasannouncedthathewillstepdownfromhispostlaterthisyear.ICSlooksforwardtoworkingwithhissuccessor,MrJorgeQuijano,whowilltakeoverinSeptember2012.
InJanuary2012,ICShostedameetingofinternationalindustryrepresentativeswithadelegationfromthePanamaCanalAuthority(ACP)todiscussthefutureofoperationsafter2014,whenthetrulyimpressiveCanalexpansionprojectisscheduledforcompletion.TherewasapositiveexchangeabouttheACP’spreliminarythoughtsonhowCanaltollsmightchange.Ingeneral,theACPindicatedthatitwouldliketointroducemoresegmentationinitstollsinordertobetterrespondtomarketfluctuationsthataffectthecompetitivenessoftheCanalasaroute.Theindustryhadunderstoodthattheseideaswereatanearlystageandwouldbesubjecttomuchfurtherdiscussion.ICSwasthereforesurprisedwhen,attheendofApril20I2,theACPannouncedmajortollincreases,formanylarger(non-container)ships,of15%overthenexttwoyears,commencinginJuly,withevenlargerincreasesformanysmallervessels.Inaddition,theACPhasannouncedgeneralincreasesintariffsforsecurityandoilspillresponseservices,bothofwhicharemandatoryforshipspassingthroughtheCanal.Theindustryisexpectedtoopposethesedevelopmentsverystrongly.Meanwhile,ICShasopposedthe3%tollincreasesannouncedbytheSuezCanalAuthority(SCA)inDecember2011,atatimewhentheindustryisstillstrugglingtomanagetheeffects
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oftheglobalfinancialcrisis.SuezCanaltollshaveremainedfrozenforthepastthreeyearsinrecognitionofdifficultshippingmarkets.ICSthereforeco-ordinatedanindustryresponsetotheSCA,explainingthattheeconomicsituationhasnotimprovedandrequestingthattheincreasesbeadjustedordeferred.Disappointingly,however,theincreaseswentaheadunchangedinMarch2012.
FollowingthedramaticpoliticaleventsinEgyptin2011,andthecollapseofothermajorsourcesofforeignincomesuchastourism,theSCAisnodoubtunderpressuretomaintainitsrevenue.TotheSCA’scredit,theCanalhascontinuedtofunctionsmoothly.However,ICShassincerepeateditsrequestforfullandproperconsultationbetweentheindustryandtheSCA,particularlywhenevertolladjustmentsarebeingcontemplated.
IndustryRepresentationandCo-operation
Astheprincipalinternationalassociationfortheshippingindustry,theprimaryfocusofICSrepresentationistheInternationalMaritimeOrganization(IMO).ICSparticipatesactivelyinvirtuallyeveryIMOCommitteeandSub-Committeeaswellasnumerousspecialistworkingandcorrespondencegroups.ICSisthereforeacknowledgedbygovernmentsasrepresentingtheconsideredviewsofallinternationalshipoperators.
Whilstefficientglobalshippingdependsonasystemofuniformglobalrules,shipoperatorsstillliveinaworldofnationstates.Theimportanceofnationalshipowner’s
associationsthereforeremainsasessentialasever.ThestrengthofICS’sadvocacyatIMO(andthevariousotherforathatimpactonshipping)isverymuchdependentontheICSmemberassociationswhichpresentagreedICSpositionstotheirmaritimeadministrationsinadvanceofintergovernmentalmeetings.ICSmemberassociationscollectivelydeveloptheindustry’sglobalpositionsthroughacomprehensivestructureofspecialistcommittees(seepage56).
UsingitsseparateISFidentityasanemployers’organisation,ICSisalsoanofficialsocialpartnerattheGeneva-basedInternationalLabourOrganization(ILO)andactsasSecretarytotheEmployers’GrouponallILOmaritimeissues.
InadditiontointeractingwithindividualgovernmentsduringmeetingsatIMOinLondonandILOinGeneva,ICScontinuesregularattendanceatmoregeneralpolicymeetingsheldbytheUnitedNationsinNewYork,theWorldTradeOrganization(WTO),theOrganizationforEconomicCo-operationandDevelopment(OECD),theConsultativeShippingGroup(CSG)ofmaritimeadministrations,theUnitedNationsConferenceonTradeandDevelopment(UNCTAD),theWorldCustomsOrganization(WCO),and,insofarastheyarerelevanttoseafarers,bodiessuchastheWorldHealthOrganization(WHO).GiventheimportanceofdiscussionsaboutCO2emissionsreduction,ICShasalsotakenupconsultativestatuswiththeUnitedNationsFrameworkConventiononClimateChange(UNFCCC)andrepresentedtheindustryatthelastUNClimateChangeConference(COP17)inDurbaninDecember2011.
ICSenjoysgoodrelationswithmanyotherintergovernmentalbodiesthatimpactonshippingincludingtheInternationalAssociationofMarineAidstoNavigationandLightHouseAuthorities(IALA),theInternationalHydrographicOrganization(IHO)andtheWorldMeteorologicalOrganization(WMO).ICSalsohasconsultativestatuswiththeInternationalMobileSatelliteOrganization(IMSO),whichisthebodythatoverseespublicsafetyandsecuritycommunicationservicesincludingtheGlobalMaritimeDistressandSafetySystem(GMDSS).Inaddition,ICSattendsmeetingsofboththeParisandTokyoMOUsonPortStateControl.
Asanemployers’organisation,andanofficial‘socialpartner’attheILO,theoppositenumberofISFistheInternationalTransportWorkers’Federation(ITF).Asreportedelsewhere,inApril2012nationalshipownerassociationsandITFunionaffiliatesheldameetingtoexchangeviewsonmattersofcommoninterest,thefirstsuchmeetingoutsidetheconfinesoftheILOforadecade.Itisintendedthatthispositivedialoguewillcontinue.Inaddition,ISFcontinuestobeamemberoftheInternationalCommitteeonSeafarers’Welfare(ICSW)whichembracessecularandreligiousseafarers’welfareorganisations.
Inviewoftheimportanceofensuringglobalregulationforaglobalindustry,ICScontinuestoworkcloselywiththeEuropeanCommunityShipowners’Associations(ECSA)incommunicatingonissueswithEuropethatarerelevantfromaninternationalperspective,andparticipatesinconsultationsorganisedbytheEUinstitutions.IntheUnitedStates,ICS
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IMOinsession
changesnecessitatedbytheSTCW2010amendments.
AnticipatingtheentryintoforceoftheILOMaritimeLabourConvention,aneweditionoftheISFGuidelinestotheILOMLCisexpectedtobepublishedinthefirsthalfof2012,inordertotakeaccountofthevariousclarificationsagreedbyILOsincetheMLCwasadoptedin2006.Incorporatingnewadviceoncomplianceandtheadoptionofbestemploymentpractices,itishopedthatthispublicationwillcometoberegardedasasisterpublicationtothedefinitiveICS/ISFGuidelinesontheApplicationoftheInternationalSafetyManagement(ISM)Code.
WorkisnowwelladvancedonaneweditionoftheICSTankerSafetyGuide(Chemicals).Thisisamajorundertakingbutpublicationisanticipatedin2013.Lookingforwards,aworkgrouphasalsobeenestablishedtobeginareviewofthecurrenteditionoftheICSTankerSafetyGuide(Gas).WorkisalsounderwayonaneweditionoftheICSBridgeProceduresGuidetotakeaccountofdevelopmentsine-navigation.
Meanwhile,inco-operationwiththeOilCompaniesInternationalMarineForum(OCIMF)andtheSocietyofInternationalGasTankerandTerminalOperators(SIGTTO)workhasprogressedonanewconsolidatededitionoftheShiptoShipTransferGuidethatwillcoverpetroleum,chemicalandgasoperations.Publicationisexpectedduring2012.
workswiththevariousUSagenciesthatimpactonshippinginliaisonwiththeChamberofShippingofAmerica,whichbyagreementofficiallyrepresentsICSinUSdiscussions.Additionally,ICSenjoysgoodrelationswiththeAsianShipowners’Forum,whosemembersarealsonationalshipowners’associations.ICSisalsonowdevelopingarelationshipwiththeAsiaPacificEconomicCo-operationforum(APEC)whichisbecomingincreasinglyengagedwithmaritimetransportmatters.
ICSworkscloselywithadiverserangeofotherindustryorganisationsthatareengagedgenerallyontransportissues,includingtheInternationalChamberofCommerce(ICC),theInternationalOrganizationforStandardization(ISO),theBusinessandIndustryAdvisoryCommitteetotheOECD(BIAC),theInternationalOrganizationofEmployers(IOE)andtheWorldOceanCouncil(WOC).
Lastbutnotleast,ICSenjoysgoodrelationswithvariousspecialistindustrybodiessuchastheInternationalAssociationofClassificationSocieties(IACS),theInternationalGroupofP&IClubs(IG),theInternationalUnionofMarineInsurance(IUMI),theInternationalAssociationofPortandHarbors(IAPH),theInternationalMaritimePilots’Association(IMPA),theNauticalInstitute(NI),andtheGlobalShippers’Forum(GSF).This,ofcourse,isinadditiontocloseco-operationwithotherspecialistinternationalshippingassociationsincludingBIMCO,theCruiseLinesInternationalAssociation(CLIA),Intercargo,Interferry,Intermanager,Intertanko,theOilCompaniesInternationalMarineForum(OCIMF),theInternationalMarineContractorsAssociation
(IMCA),theInternationalMaritimeEmployers’Committee(IMEC),theInternationalSupportVesselOwners’Association(ISOA),theInternationalParcelTankersAssociation(IPTA),theSocietyofInternationalGasTankerandTerminalOperators(SIGTTO)andtheWorldShippingCouncil(WSC).
Publications
AlargeproportionofICSresourcesisdevotedtotheproductionofpublicationsforthebenefitoftheindustry.IssuedunderthebannerofMarisecPublications,ICSpublishesover30titleswhichprovideguidanceonregulatorydevelopmentsandindustrybestpractices,especiallywithregardtosafety,environmentalprotectionandemploymentstandards.
UnderthebadgeofISF,ICScurrentlyhasanambitiousprogrammetoupdatevariouspublicationstoreflecttheentryintoforce,inJanuary2012,ofthe2010amendmentstotheIMOConventiononStandardsofTraining,CertificationandWatchkeepingforSeafarers(STCW).In2011,thisincludedpublicationoffullyupdatedGuidelinestotheSTCWConvention,followedbyrevisedonboardtrainingbooksfordeckandengineratings,whichtakeaccountofthenewSTCWgradesofAbleSeafarerDeckandEngine.Updatedonboardtrainingrecordbooksfordeckandengineofficercadets,thatwilladdressthenewSTCWcompetencestandards,areduetobepublishedinthefirsthalfof2012.Inco-operationwithitspartnerITEnergy,ISFhasalsolaunchedaneweditionofitspopularISFWatchkeepercomputersoftware,whichallowsseafarers’workandresthourrecordstobemaintainedinaccordancewithIMOandILOregulatoryrequirements,including
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ICS/ISFPublications
2012
Available from Marisec Publications
www.marisec.orgInternational Chamber of Shipping
In
ternational Shipping Federation
53
RepresentingtheGlobalShipping
Industry
OrganisationalMatters
ThecurrentICSmembershipcomprisesnationalshipowners’associationsfrom36countries,representingallsectorsandtradesandover80%oftheworldmerchantfleet(seeinsidebackpage).InJanuary2012,theInternationalMaritimeEmployers’Committee(IMEC),whichengagesincollectivebargainingnegotiationswithseafarers’unions,joinedICSasanAssociateMember.
PeterHinchliffecontinuestoserveasICSSecretaryGeneral.SincehisappointmentinSeptember2010hehasalreadyoverseensomesignificantorganisationalchanges.The2011AnnualGeneralMeetingtooktheimportantdecisiontofullyintegratetheICSorganisationwiththatoftheInternationalShippingFederation(ISF).ForallintentsandpurposesICSandISFarenowthesameorganisationandthearticlesandrulesofICShavebeenamendedaccordingly.However,ICSwillcontinuetousetheseparateidentityofISFwhenrepresentingtheindustryasanemployers’organisation,forexampleatmeetingsoftheInternationalLabourOrganizationorwhendealingwithlabouraffairsquestions.
SinceJune2011,theCommitteesofICSandISFhavebeencombinedintoasinglestructure,asshownoverleaf,reportingtoasingleICSBoardofDirectors,membershipofwhichhasbeenexpandedandtowhichallFullMembersthatsubscribetobothtradeassociationandemploymentaffairsservicesarenowentitledtoberepresented.ThiswillhelptoensurethatthepositionsadoptedbyICS
trulyreflecttheconsideredviewsoftheentireglobalshippingindustry.
TheSecretariatandstaffofICSisprovidedbyMaritimeInternationalSecretariatServicesLimited(Marisec),whichiswhollyownedbyICS.MarisecalsocontinuestoprovideservicestotheInternationalSupportVesselOwners’Association(ISOA).
InOctober2011,ICSrelocatedtobrightnewofficesatStMaryAxeintheCityofLondon.InDecember,thenewofficeandmeetingfacilitieswereofficiallyopenedbytheICSChairmaninthepresenceofrepresentativesfromthevariousinternationalmaritimeorganisationswithwhomICSworksmostclosely.
The2011AnnualGeneralMeetingofICS(andthefinalAnnualGeneralMeetingofISF)washostedbytheGermanShipowners’AssociationinHamburginMay.Underthenewarticlesofassociation,thefourICSViceChairmenelectedfor2011/2012wereCaptainDirkFry(Cyprus),MrFrankLeonhardt(Germany),MrTrygveSeglem(Norway)andMrGerardoBorremeo(Philippines).AnexpandedBoardofDirectors,whichmeetsthreetimesayear,wasalsoelectedbytheICSAGM,asshownontheoppositepage.MrSpyrosMPolemis(Greece)continuedtoserveasChairmanfollowinghisre-electionin2010.
MrPolemishasservedasICSChairmanforthelastsixyearsandhasannouncedthathedoesnotintendtoseekre-electionfor2012/13.AsuccessorwillbeelectedattheICSAnnualGeneralMeetinginMay2012,whichwillbehostedbytheAustralianShipownersAssociationinPortDouglas,Queensland.
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ICSSecretaryGeneral,
PeterHinchliffe
RepresentingtheGlobalShipping
Industry
55
ICSBoardofDirectors2011-2012
ICSSecretariat
ICSChairman,SpyrosMPolemisopensthenewofficesatStMaryAxe
Australia MrNoelHart Bahamas MrChrisOliver Belgium MrPeterVierstraet Canada MrGerryCarter Cyprus CaptainDirkFry Denmark MrCarstenMortensen Finland MrJanHanses France Mr.ChristianGarin Germany MrFrankLeonhardt Greece MrAnastasiosPapagiannopoulos HongKong Mr.RobertHo Ireland MrJohnDolan Italy MrStefanoMessina Japan MrHiroshiHattori Liberia MrMarkMartecchini Mexico MrLuisOcejo Netherlands MrsKarinOrsel Norway MrTrygveSeglem Philippines MrGerardoBorromeo Singapore MrEsbenPoulsson Sweden MrLarsHöglund Turkey MrTamerKiranUnitedKingdom MrMichaelParker UnitedStates MrCharlesParks
ICSOrganisationalStructure
MarineCommittee
Chairman:CaptainTrevorSmith
Singapore
FullMembersAssociateMembers
BoardofDirectors
OffshorePanel
Chairman:MrDavidBlencowe
Denmark
DangerousGoodsPanel
Chairman:MrJohnLeach
UnitedKingdom
EnvironmentSub-Committee
Chairman:MsTeresaLloyd
Australia
CanalsSub-Committee
Chairman:MrKoichiInoue
Japan
PassengerShipPanel
Chairman:MrTomStrang
UnitedKingdom
ContainerPanel
Chairman:MrMikeDownesUnitedKingdom
GasCarriersPanel
Chairman:Tobeconfirmed
BulkCarrierPanel
Chairman:MrDimitriosFafalios
Greece
ChemicalCarriersPanel
Chairman:MrJosephLudwiczak
Liberia
OilTankerPanel
Chairman:MrRogerRestaino
Liberia
Manning&TrainingCommittee
Chairman:MrTjitsoWestra
Netherlands
InsuranceCommittee
Chairman:MrMatheosLos
Greece
Construction&Equipment
Sub-CommitteeChairman:
MrMauriziod’AmicoItaly
ShippingPolicyCommittee
Chairman:MrJohnCLyras
Greece
MaritimeLawCommittee
Chairman:MrViggoBondi
Norway
LabourAffairsCommittee
Chairman:MrArthurBowring
HongKong
Radio&NauticalSub-Committee
Chairman:CaptainPaulJones
Singapore
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Members of the International Chamber of Shipping
FULL MEMBERS
AUSTRALIA Australian Shipowners Association BAHAMAS Bahamas Shipowners’ Association BELGIUM Royal Belgian Shipowners’ Association BRAZIL Syndarma•• BULGARIA Bulgarian Shipowners’ Association• CANADA Canadian Shipowners’ Association CHILE Chilean Shipowners’ Association CHINA China Ocean Shipping (Group) Co•• CROATIA Mare Nostrum, Croatian Shipowners’ Association• CYPRUS Cyprus Shipping Chamber DENMARK Danish Shipowners’ Association FINLAND Finnish Shipowners’ Association FRANCE Armateurs de France GERMANY German Shipowners’ Association GREECE Union of Greek Shipowners Hellenic Chamber of Shipping• HONG KONG Hong Kong Shipowners’ Association INDIA Indian National Shipowners’ Association IRELAND Irish Chamber of Shipping ISLE OF MAN Isle of Man Shipping Association•• ITALY Confederazione Italiana Armatori (Confitarma) JAPAN Japanese Shipowners’ Association KOREA Korea Shipowners’ Association KUWAIT Kuwait Oil Tanker Co. LIBERIA Liberian Shipowners’ Council MEXICO Grupo TMM S.A. NETHERLANDS Royal Association of Netherlands Shipowners NORWAY Norwegian Shipowners’ Association PHILIPPINES Filipino Shipowners’ Association SINGAPORE Singapore Shipping Association SPAIN Asociación de Navieros Espanoles SWEDEN Swedish Shipowners’ Association• Swedish Shipowners’ Employer Association•• SWITZERLAND Swiss Shipowners’ Association• TURKEY Turkish Chamber of Shipping UNITED KINGDOM UK Chamber of Shipping UNITED STATES Chamber of Shipping of America
ASSOCIATE MEMBERS
Abu Dhabi National Tanker Co. (Adnatco)• BW Fleet Management Pte. Ltd• Chamber of Shipping of British Columbia• Cruise Lines International Association (CLIA) European Dredging Association (EuDA) Interferry• International Maritime Employers. Committee (IMEC) Sail Training International Shipping Australia Ltd• World Shipping Council• • Trade Association Only •• Employers Organisation Only
Representing the Global Shipping Industry
International Chamber of Shipping
38 St Mary AxeLondon EC3A 8BH
Tel +44 20 7090 1460Fax +44 20 70901484
www.ics-shipping.org