smp expo-post summit report

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Shipping, Marine & Ports Exposition 2012Post-Summit Report

June 2012

www.deloitte.com\in


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3/60Shipping, Marine & Ports Exposition 2012 Post-Summit Report 3

Foreward

The SMP Expo 2012 is a one of its kind international conferences organized by Chemtech Foundation

of Jasubhai Shah & Group. 8th February 2012 marked the 38th year of operation of the Chemtech

Foundation.

The theme for this years conference, Maritime Exposition A Gateway to growth, highlighted the impor-

tance of the maritime industry in the development of Indias growth. The conference was visited by several

dignitaries representing the government & the private sectors in the Ports & Shipping industry. The confer-

ence also brought forth the representation of countries such as Korea & Japan.

Deloitte India is proud to be associated with the event as the Knowledge Partner and as part of the associa-

tion, has published this Post-Conference Knowledge Paper for the Shipping Marine & Ports Exposition 2012.

This knowledge papers aims to bring forth the moments experienced and scent of knowledge sprinkled

during the conference in the SMP EXPO. This being a Post-Summit Report, it highlights the key points of

discussions & presentations addressed by the speakers at the conference.

The successive sections will take readers through day 1, 2 & 3 sessions of the conference. We hope that this

paper becomes an important way forward to work collectively and face the challenges experienced by the

shipping and port industry

Best wishes,

Hemant B. Bhattbhatt

Senior Director, Consulting

Deloitte Touche Tohmatsu India Private Limited


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Contents

Day 1 6

Inauguration of the SMP EXPO 2012 7

Session 1: Shipping a new era 11

Session 2: Future Trends in Shipping 23

Session 3: Panel Discussion: Wither Indian Shipping for the next decade 32

Day 2 34

Session 3: Indigenous Shipbuilding & Naval Construction 35

Session 4: Panel Discussion on Maritime Exposition-A Gateway to Growth 40

Day 3 44

Session 1: Regulation & Policy Environment 45

Session 2: Panel Discussion on Connectivity of Rail, Road to Sea Ports 49

Session 3: Reducing Transaction Cost 55

Contact 59

Deloitte Offices in India 60


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Day 1



Inauguration of the SMPEXPO 2012

The inaugural session of the Conference started with the

lighting of the auspicious lamp at the hands of the Chief

Guest, Shri K. Mohandas, Secretary, Ministry of Shipping

and other dignitaries.

The conference was addressed by Mr. Jasubhai Shah,

Chairman, Chemtech Foundation

Following were the speakers for the inaugural

session:

Welcome Address: Mr. Jasu Shah

The Welcome Man as he addressed himself,

Mr. Jasubhai Shah, Chairman, Chemtech Foundation

extended a warm welcome to the guests, advisory

board members & delegates from the shipping industry

from across the globe.

Mr. Jasubhai took pride in stating that in its 38 thyear

of operations and after organizing numerous exposi-

tions and conferences for various industries, Chemtech

Foundation is respected and regarded as one of the

leading organizations striving to gather industry intel-

lectuals and players at one place and discuss various

issues, share knowledge and advancements made by the

countrys shipping industry as a whole.

While explaining reasons behind inauguration of the

SMP Expo before the Ocean Tech Expo, he praised the

industry and government alike by calling it One of the

most vibrant and friendly industry. He echoed the views

of all dignitaries that the conference can be instrumental

in bringing out a roadmap for the industry to chart out

its way forward.

Chairman Address Shipping Overview: Mr. S.

Hajara

Mr. S Hajara, the Chairman & Managing Director of

Indias largest public sector shipping company, The

Shipping Corporation of India, presented the overview

& current status of the shipping industry in India. He

praised the SMP EXPO and viewed it as having a great

significance on the annual calendar of maritime events.

To state in his words, these conferences involving

technology & knowledge transfers are important for

maritime growth.

Mr. Hajara expressed optimism for the shipping industry

despite the turbulent times it is presently going through.

In his opinion, though demand and supply for trade

Sr. Topic Speaker Designation & Company

1 Welcome Address Mr. Jasu Shah Chairman, Chemtech Foundation

2Chairman Address

Shipping OverviewMr. S. Hajara

Chairman & Managing Director - The Shipping

Corporation of India Ltd

3

Address by Global Brand

Ambassador SMP WorldExpo 2012

Capt. J. C. Anand

Chairman Emeritus, IRS and Global Brand

Ambassador, Shipping, Marine & Ports World Expo2012

4Address by International

GuestMr. Yoshida

Director for Boat Affairs Office, Shipbuilding & Ship

Machinery Division, Maritime Bureau, Ministry of

Land Infrastructure, Transport & Tourism, Japan

5Keynote Address by

International GuestMr. Oh Kong Gyun Chairman & CEO, Korean Register of Shipping

6 Address by Chief Guest Shri. K. Mohandas Secretary of Shipping, Govt. of Ind ia

7 Vote of Thanks Mr. Navpreet SinghJoint Managing Director, Dolphin Offshore

Enterprises India Ltd


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were not evenly matched, and supply far exceeded the

demand, this was a time to put all heads together & see

how to improve the situation.

Initially, high priced estates & high growth in supply of

ships were the two primary dangers for the ship owners

and shipping companies as the demand for ships

outnumbered the supply of ships. Due to this the ship

owners faced competition and the rates / tariff dropped.

According to Mr. Hajara, the global demand-supply

scenario where supply surpasses demand was witnessed

from 2008 and is going to be experienced in 2012

as well. Statistics show that in most of the cases like

Oil trade & dry bulk trade, the demand falls short of

supply by almost 1.5% to 2%. The demand supply for

container segment has however remained more or

less constant.

He added that the Indian scenario however, is moder-ately better than the global one. India is not only the

second fastest developing economy in the world but is

also turning out to be a major refining hub with the 4th

largest refining capacity and 4thlargest imports of crude

oil. In the recent past Ind ia has witnessed a growth of 8

to 9 % against which the current growth of around 7%

seems inadequate. However, the Indian industry must

see it as a healthy growth.

Containerization is yet another segment, which will

be witnessing boost due to India becoming a manu-

facturing hub. Offshore business also has tremendouspotential due to the booming EMP market and therefore

all round shipping prospects seem to be bright.

Concluding his address, Mr. Hajara said that investments

in Indian shipbuilding industry and ports are expected to

increase in the coming years owing to 100% FDI being

permitted in almost all maritime industry segments,

and the steps taken towards towards strengthening the

shipbuilding engineering and steel making industries.

Traffic at ports is expected to go up to 5 billion tonne by

2030. Indian Maritime Industry thus offers an important

opportunity to the investors / stakeholders across the

world in addition to the Indian players..

Address by Global Brand Ambassador, SMP

World Expo 2012: Capt. J.C. Anand

About Capt. Anand:

Capt. J.C. Anand rose from the ranks as a Navigating

Cadet and eventually became the President of the IRS.

Also a ship owner himself, Capt. Anand was elected as

President of Indian National Shipowners Association for

three successive terms. He was instrumental in estab-

lishment of the national ship classification society viz.,

Indian Register of Shipping. He retired as the Chairman

of IRS recently in 2010 and has been appointed as

Director in IACS Limited.

Address as the Global Brand Ambassador, SMP

World Expo 2012:

Capt. Anand praised the governments efforts to

develop the maritime industry. He substantiated by

giving example of how the government spent a fortune

for establishing the Indian shipping industry, training

of shipping personnel and developing ports and alliedsectors. Till today, around 50,000 sea farers have been

trained in India who have done India proud. In his

words, There is not one country that will not approach

us for our sea farers.

One of the commendable contributions of the Indian

Government towards the development of the maritime

industry has been to make loans (covering 90% of the

project cost) available at a minimal rate of interest of

4-6% for various segments. This has not been seen

anywhere else.

According to Capt. Anand, economic ups and downs

follow each other and these are the times to synergize

and foster team work between stakeholders & the

government. The unified growth of the maritime

industry cannot be achieved unless it is transparent,

clear and not fragmented with personal interests.

Indian maritime industry should learn from and share

experience with various foreign delegations through

conferences such as SMP Expo, especially in technolog-

ical areas where Indian has a comparative back footing.

Capt. Anand was of the opinion that the Ministry of

Shipping should work more closely with the Ministry

of Finance to be more precise and meaningful in what



is expected of the Indian Government by the Indian

maritime fraternity. Introspection, staying united in

times of crisis, making proposals to the government

& involving them as partners will go a long way in the

development of maritime industry.

Address by Special Guest: Mr. Yoshida, Japan

Mr. Yoshida is the Director for Boat Affairs Office,

Shipbuilding & Ship Machinery Division, Maritime

Bureau, Ministry of Land Infrastructure, Transport and

Tourism, Japan. His participation in this capacity made

it the Japanese Ship Machinery Industrys first official

participation in an Indian Maritime Industry event.

A man of few words, Mr. Yoshida announced Japans

deep interest in developing Indian Maritime industry

& its resources. Though the current capacity of Indian

Shipping tonnage is quite small (only 109 gt in 2010

according to Lloyds), India is poised to grow to No. 1

in the world by the year 2030. Mr. Yoshida echoed the

thoughts of all present when he said that growth ofthe maritime industry is very important for a countrys

growth and hoped to hone relations between the

shipbuilding and ship machinery industry of two great

nations through such conferences and expositions.

Keynote Address by International Guest: Mr. Oh

Kong Gyun from Korea

About Mr Oh Kong-Gyun, Chairman and CEO,

Korean Register of Shipping

Mr. Gyun, International Guest for the SMP Expo 2012,

Chairman and CEO, Korean Register of Shipping repre-sented the Korean Shipping industry.

Mr. Oh graduated with Bachelors in Machinery from

Korean Maritime University in 1975. He obtained his

Post Graduation in Law from the same university in 1975

after which he pursued and successfully completed the

Ph.D programme in Maritime Law in 2006. Alongside

being the Chairman and CEO of the Korean Register

of Shipping, Mr. Oh is also the Vice Chairman of

International Association of Classification Societies and

Chairman of Korean Society of Marine Engineering. He

has held various management positions in his career in

the maritime industry.

Address to the Conference:

Mr. Oh expressed his sincere gratitude towards

Chemtech Foundation for inviting KRS to one of the

important events in the maritime industry of India. Mr.

Oh touched the point of witnessing the paradigm shift

of shipping from the west to east. Importance of Asia in

shipping and shipbuilding has risen significantly in the

past 2 decades. Today Asian ship owners control nearly

half of the worlds commercial fleet and produce nearly

90% of the new building ships in the world.

Asian banks are becoming more sophisticated in ship

finance and Asian countries are embarking on a voyage

where we need to clearly express a louder Asian voice to

better position ourselves in the world market.

The formation of organizations namely (i) PermanentSecretary for Asian ship owners (ASF), representing Asian

ship owner interests in Singapore, (ii) Association of

Asian Classification Societies and (iii) Consulted efforts

to form and achieve the NGO status in the International

Maritime Organization & to support the R&D and other

aspects are the three most singular achievements in this

direction.

More time and work is needed to solidify the internal

organization structures and processes. To establish

marine insurance companies under a single umbrella

would be an initiative which will ensure check andbalance in the Asian maritime sectors.

Mr. Oh talked about maritime regulations having

a profound effect on the operations of maritime &

shipping companies. The current IMO discussion about

climate change and air emissions is important. Issues like

Ballast Water Treatment and ship recycling are also vital

for Asian industry.

Mr. Oh was positive that through one coherent and

strong voice as well as representations made in the


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international maritime discussions by the Asian countries

will help in addressing all these issues and challenges.

With this he closed his speech.

Address by Chief Guest: Shri. K. Mohandas.

Secretary of Shipping, Government of India

Shri K. Mohandas Secy. of Shipping

As the Chief Guest for the conference, Shri K. Mohandas

released the Exhibitors Directory and later addressed theinaugural session of the conference.

Mr. Mohandas reiterated the fact that the maritime

industry was passing through a difficult phase as the last

2-3 decades have not been very encouraging in terms of

trade and the economic shocks have affected all walks

of life and philosophy of business. Despite the odds, the

Indian economy fares well as compared to most other

countries. Incidentally, 2011 provided achievement

of the Indian Port capacity crossing capacity of

1 billion ton.

Indias control over the global shipping industry is very

meagre of around 1% and the tonnage stands at 4%.

Mr. Mohandas talked about the proposal for a system

under the Ministrys evaluation in which it is proposed

that a certain percentage of Indian cargo should be

carried by Indian boaters only. It seems quite a feasible

and practical option to secure Indian Cargo. Another

option of starting a fund for Indian flagged ships and

development of Indian Cabotage for coastal shipping

and related infrastructure such as dedicated minor ports

is also being considered. He stressed on the need for

developing the shipbuilding industry to take control of

the global market share.

He also extended thanks to Mr. Oh from KRS for

supporting the Indian Maritime Industry when needed.

With a positive view towards the future of shipping

industry, Shri Mohandas ended his speech

This was followed by presenting mementos to the

distinguished guests.

Vote of Thanks by Mr. Navpreet Singh, Joint

Managing Director, Dolphin Offshore Enterprises

India Ltd

The closure of the inaugural session was addressed by

Mr. Navpreet Singh, Joint Managing Director, Dolphin

Offshore Enterprises.

He extended a vote of thanks to the guests and

delegates present in the conference, on behalf of the

Chemtech Foundation, for taking out time to attend

the conference. Mr. Singh added that a better under-standing of where we are today and what the future

holds for us is what is wanted of conferences. On the

behalf of Chemtech foundation, he acknowledged the

sponsors and Chemtech Team who have made contribu-

tions and efforts to make the conference successful.

He urged all present to participate in the coming

sessions to make the conference a success.

With this the session ended, followed by a tea break.

Despite the odds, the Indian economy fareswell as compared to most other countries.Incidentally, 2011 provided achievement ofthe Indian Port capacity crossing capacity of1 billion ton.



Session 1: Shipping a new era

Session Chairman

Mr. Arun Sharma, MD & Chairman, Indian Register of

Shipping

About Mr. Arun Sharma

Mr. Arun Sharma joined the Shipping Corporation of

India as a sea going engineer, gradually moving to shore

establishment of SCI in 1978. He was Vice President

Commercial and Operations with Varun Shipping

Company between 1993 and 1999 and the President

of Great Eastern Shipping between 2000 and 2006. Mr.

Sharma joined the Indian Register of Shipping on 1st

September 2011 as MD and Chairman designate. He

has been on the board of Indian National Ship-owners

Association and South East Asia Committees of various

Classification Societies Association for the year 2012.

Mr. Sharma was the chairman of the first session on

Day 1 of the conference with the theme for the session

being Shipping a new era.

Session commencement

The session marked the beginning of the technical

discussions of the conference. Eminent personalities

were present in the forum to discuss new trends in

shipping.

Mr. Arun Sharma took charge as the session chairman

and said a few words on classification and the evolving

role of IRS & classification society as a whole.

He admitted that ship classification is a challenging

job as it has moved from merely being a Register and

Evaluator of Ships in 1760 when the class was founded

to being Manager of safety and protector of environ-

ment as it is today. Even this does not limit the respon-

sibility of the class and now there is still a fundamental

change in the role played by the class. Besides becoming

a maritime regulator it is becoming maritime innovator

to constantly come up with new ideas and technology

for overall shipping safety and efficiency improvement.

He thanked the organizers for the opportunity and with

the set of very good presentations lined up, expressed

hope that each speaker within the allotted time of 15

minutes will do justice to the presentations on topics

allotted to them. This would then be followed by theQuestion & answer session which will mark the end of

the first session.

Sr. Topic Speaker Designation & Company

1 Ballast Water Treatment Mr. Akshay Jain CEO, Vedam Design & Technical Consultancy Private

Limited

2 Energy Efficiency Design Mr. Patrick Baan Director, Ship Performance, Wartsila, S.p.A

3 Zero Emission Ship Mr. Holger Jefferies Dipl.-Ing., Naval Architect Vice President, Ship New

Building ASEA Germanischer Llyod SE

4 New Ship Designs for

next decade

Mr. Gert Christensen Senior Naval Architect & Master Mariner, Knud E.

Hansen A/S, Denmark

Session presentation topics and the speakers


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Ballast Water Treatment Retrofitting Challenge

Speaker: Mr. Akshay Jain, CEO, Vedam Design &

Technical Consultancy Private Limited

About Mr. Akshay Jain:

Mr. Akshay Jain started his career in New Building

Department of OMI Shipping and later founded Vedam

design along with his colleagues in 2007. Vedam has

been awarded as Fast Growth 25 company by All

India Network, initiated in Harvard Business School,

USA. Akshay has a B.Tech in Naval Architechture

from IIT-Madras and is a Level-1 qualified CFA. He

is also a Professional Affairs Secretary in Institution

of Naval Architects and is an active member of the

Indus Entrepreneurs, Mumbai Chapter and Institute of

Directors, Mumbai Chapter.

Presentation glimpse:

Mr. Akshay addressed the topic Ballast Water Treatment

Retrofitting Challenge as a very apt & relevant topic

in current times for shipping industry. He spoke on theBallast Water Convention, when it is expected to come

into force, treatments and types approved under the

convention for treatment of bal last water.

Following section gives an overview of the presentation

made by Mr. Jain at the SMP Expo 2012 conference.

Secretary General IMO 2003 quoted that The introduc-

tion of harmful aquatic organisms and pathogens to

new environments, including via ships ballast water, has

been identified as one of the four greatest threats to the

worlds oceans

In February 2004, International Maritime Organization

(IMO) adopted a convention for the Control &

Management of Ships ballast Water and Sediments

commonly known as Ballast Water Convention (BWC)

The objective of the BWC is to regulate the water and

reduce the risk of introduction of non-native species

from ships ballast water. It is applicable to all vessels

operating in aquatic environment designed to carry

ballast water and are entitled to fly the flag of a Party to

the convention.

The BWC regulates the discharge of ballast water either

by BW exchange under Regulation D1 or by treating

ballast water to meet the certain standards specified

under Regulation D2 depending on ships build date and

quantity of ballast carried on board.

The convention also issued Guidelines from G1 to G14.

The requirement of Ballast Water Treatment comes

from the Regulation D2. Following are some guidelines

for BWC D2 Regulations for organisms permitted in

Ballast Water during discharge

Organism category

permitted in ballast

water during discharge

Regulation

Plankton, >50 m in

minimum dimension< 10 cells / m3

Plankton, 10-50 m < 10 cells / ml

Toxicogenic Vibrio cholera

(O1 and O139)

< 1 cfu* / 100 ml or

less than 1cfu /g (wet

weight)

Escherichia coli < 250 cfu* / 100 ml

Intestinal Enterococci < 100 cfu* / 100 ml

The BWC sets standards for treatment systems to

comply with. The treatment systems must be tested and

approved in accordance with IMO guidelines G8 & G9.

There are different regulations in place for BWT in

various regions and this makes it difficult for shipping

companies to comply with all the regulations and provi-

sions. To make it easier for compliance, a uniform set of

regulations is being set which is known as Ballast Water

Convention, wherein the BW US Regulations play animportant role.

Under the BW US Regulations, USCG has proposed a

regulation to be implemented in two phases:

Phase 1 which is same as IMO-D2.

Phase 2 which is a 1000 times stringent and if it

comes into force then it will be applicable for ships

built after 2016

The BWC Entry in Force will be after 12 months after

at least 35% of the worlds merchant shipping gross

tonnage ratifies the convention. Following table shows

us the status of ratification till date:


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The BWC is not yet ratified however once any of the

major states like Gibraltar or Greece ratifies it, then it

would immediately come into force.

Implementation of BWC:

The BW Convention is dependent on Built date and

ballast capacity of the ship, as given in the table below.

Applicability of D2 Standards

Built Date 3 Categories

Before 20092009 2012

After 2012

Ship Type

(Ballast

Capacity)

2 Categories

5000 CuM

1500 5000 CuM

BWC Implementation Schedule:

Ships built in after 2012 etc. should immediately

comply with this regulation

For ships built between 2009 & 2012 less than 5000cu M capacity comply immediately and ships with

greater than 5000 cu M capacity should comply after

2016.

Vessels built in and after 2009 with Ballast capacity less

than 5,000 CuM are required to immediately comply

with the BWT D2 standards. Deadlines for the imple-

mentation of the BWT D2 standards ratification have

been missed due to the slow pace of adoption

BW Treatment Process:

There are two main processes for treatment of Ballast

Water namely (i) Filtration i.e. to filter out organisms

greater than 50 microns (ii) Disinfection i.e. using

chemicals like chlorine or means such as Ultra Violet

rays etc. to kill the microorganisms of smaller size by

physical disinfection and chemical disinfection.

Each ship being unique, has a d ifferent BWT require-

ment. Even within the same fleet it is not necessary to

have same BWT for the ships. Following are some of

the basic steps which should be followed to select the

equipment for BWT.

BWT Engineering:

Feasibility & Selection of Equipment

Installation Location

Piping Design Electrical Design

BWT Installation:

Methodology

Execution

Project Management

BWT Retrofit Challenge:

The major challenge is that around 60,000 ships are

required to be retrofitted in a short period of time.

Under the existing conditions all the existing ships must

start retrofitting by 2015. Many ship owners in US andUK have already started with the retrofitting exercise.

Though the price of equipment has drastically reduced

in the last two years, it may see a reverse trend post

the ratification as the sudden demand for retrofits will

cause:

Equipment - High Cost / High Lead time / Non

Availability

Long Class approval time

Premium Engineering hours

The presentation ended with a sample slide from a pres-

entation by Ministry of Infrastructure and Environment in

one of the Ballast Water Conventions, which said Ship

owners be prepared, yesterday was better

States % Tonnage States Already Ratified

Required: 30 Required: 35% Albania, Antigua and Barbuda, Barbados,Brazil, Canada, Cook Islands, Croatia, Egypt, France, Iran, Kenya, Kiribati, Republicof Korea, Liberia, Malaysia, Maldives, Marshall Islands, Mexico, Netherlands,Nigeria, Norway, Saint Kittsand Nevis, Sierra Leone, South Africa, Spain, Sweden,

Syrian Arab Republic, Tuvalu, Lebanon, Trinidad & TobagoRatified: 33 Ratified: 26.46%



Energy Efficient Design by Mr. Patrick Baan

Mr. Patrick Baan, Director, Ship performance,

Wartsila Italia S.p.A

About Mr. Patrick Baan:

Mr. Baan started to work for Wartsila in the Netherlands

as Application Engineer for four stroke engines in

its marine division. In 2002, Patrik was relocated to

Wartsila office in Italy. After having been responsible

for the marine engineering team in Italy he was made

responsible for marine engineering for the ship power

division. Mid 2009 he started in his current position as

Director, Concepts and Solutions


Mr. Baan gave a brief introduction of Wartsila Italia and

stressed that though shipping is extremely efficient, yet

emissions from merchant shipping are going to be the

source of concern in the coming future. Statistics from

IMO show that while in 2007 and 2011 the shipping

emissions equal to 2.7% and 5% of global carbonemissions, it is poised to be around 72% of the total

carbon emissions by 2020 if no action is taken.

Energy Efficient Designs (EEDs) for ships along with

operational care are some of the steps for reducing the

carbon emission & saving energy.

He presented a typical cost structure of a merchant ship

& the factors within the design and operations which

have impact on energy consumption. These can be seen

in the diagram and the table below:

Factors impacting energy consumptions:

Design Operation

Concept, design

speed and capabilityEnvironmental conditions

Hull and

superstructure

Fleet management, logistics

and incentives

Power and propul-

sion systemsVoyage optimization

Energy management

Energy EfficiencyDesign Index

Energy Efficiency OperationalIndex

Reduction potential

50% compare to

average fleet 2009

Reduction potential 50%

compared to business as

usual 2009

Sales

Typical cost stucture of a merchant ship

Capital costs

Cargo handling costs

Bunkers

Port dues

Canal tolls and misc

Manning

Repairs and maintenance

Insurance per annum

Administration/Management

Stores and lubes


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Key highlights of actions taken by IMO on Energy

efficiency:

March 2010 - MEPC actively considers making the

technical and operational measures mandatory for all

ships irrespective of flag and ownership July 2011 - MARPOL Annex VI regulations adds a new

chapter 4 for EEDI and EEOI

EEDI entry into force in 2013 for all new ships

Entry into force by 2013, IMOX expects EEDI will

reduce CO2 from shipping 45 - 50 million tonnes

annually by 2020

Energy efficient designs are advantageous since they

reduce a lot of carbon emissions and also reduce cost

by optimizing the utilization of energy on ships. Mr.

Baan reiterated that optimizing the operations of shipsby utilizing right ships for right operations and saving

of time is also one of the key factors in addition to

adopting energy efficient ship designs. Following are

some of the points presented by Mr. Baan

The following diagram shows the energy efficiency leavers:

Fleet energy efficiency optimization

Best vessel for the jobOptimal fleet capacity usage

Voyage energy efficiency optimization

Navigation Clever routingJust in time arival

Ships energy efficiency optimization

Trim optimizationHull cleaning

Poser plant efficiency optimization Advise optimum machinery usage to match

required output needs

Machinery efficiency optimization

(re) tuning or configuration of the product foroperational conditionsUpgrade machinery to higher performance levelMaintain the original performance

A

B

C

D

E



Energy Efficient Design Considerations

Sr. Step / consideration Results / energy savings

1

Optimization of Propeller & Hull Interaction: The acceleration of water due to propeller

action has a negative effect on resistance of the ship or appendages. This effect can

today be predicted and analyzed more accurately using computational techniques.

Redesigning the hull, appendages & propeller

together improves performance by upto 4% at

a low cost.

2

Advanced propeller blade sections: It improves the cavitation performance and frictional

resistance of a propeller blade.

As a result the propeller is more efficient;

improved propeller efficiency of up to 2%.

3Propeller tip winglets: Winglets are known from the aircraft industry. The design of

special tip shapes can now be based on computational fluid dynamic calculationsIt will improve propeller efficiency up to 4%.

4 Propeller nozzle: Installing nozzles shaped like a wing section around a propeller will

save fuel for ship speeds of up to 20 knots.

Up to 5% power savings compared to a vessel

with an open propeller.

5

Pulling thruster: Steerable thrusters with a pulling propeller can give clear power

savings. The pulling thrusters can be combined in different setups. They can be

favourably combined with a centre shaft on the centre line skeg in either a CRP or

a Wing Thruster configuration. Even a combination of both options can give great

benefits. The lower power demand arises from less appendage resistance than a

twin shaft solution and the high propulsion efficiencies of the propulsors with a clean

waterflow inflow.

The propulsion power demand at the

propellers can be reduced by up to 15% with

pulling thrusters in advanced setups

6 Acceptance of Wartsila Low Loss Concept for power generation & Constant versus

variable speed operations

Can reduce a considerable amount of energy

consumption as against the traditional models

7

Variable speed electric power generation: The system uses generating sets operating in

a variable rpm mode.

The rpm is always adjusted for maximum efficiency regardless of the system load. The

electrical system is based on DC distribution and frequency controlled consumers.

This reduces number of generating sets by

25%.

Optimized fuel consumption, saving 5-10%.

8 Reduce ballast & optimize main dimensionsCan reduce considerable amount of energy

consumption

9Ducktail waterline extension: A ducktail is a lengthening of the aft ship. It is usually 3-6

meter long. The basic idea is to lengthen the effective waterline and make the wetted

transom smaller. This has a positive effect on the resistance of the ship. In some cases

the best results are achieved when a ducktail is used together with an interceptor.

Lower propulsion power demand by 4% to

10%.

Corresponding improvement of 3-7% in total

energy consumption for a typical ferry.

10Minimizing resistance of hull openings, Waste heat recovery, use of Natural gas as

marine fuel

Can reduce considerable amount of energy

consumption as against the traditional

methods


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Mr. Baan concluded the presentation by saying that the

shipping industry has to take responsibility in reducing

its environmental footprint. Significant savings can be

achieved in sea transportation by optimizing design &

operations of ships. To ensure optimal use of assets, ship

performance management should be used by shipping

companies.

Zero Emissions Ship by Mr.Holger Jefferies

Mr. Holger Jefferies, Dipl.-Ing., Naval Architect, Vice

President, Ship New building ASEA-Germanischer

Lloyd SE

About Mr. Holger

Holger Jefferies graduated in Naval Architecture

and subsequently joined the Engineering Service of

Germanischer Lloyd in Hamburg. In 2004, he changed

to the Ship Newbuilding Division, Hull Structure Plan

Approval and took over the responsibility of the ASEAShanghai Office. He has been in charge of the ASEA

Offices of Germanischer Lloyd in Shanghai, China and

Busan, South Korea. In 2009, Mr. Holger was appointed

VP of Germanischer Lloyd in charge of Ship Newbuilding

in Asia.


Mr. Holger thanked the Chairman of the session Mr.

Arun Sharma for his brief and warm introduction and

then set out on the never before heard venture of

Zero Emission Ship. The coming sections outline the

important points outlined by him on this special project:

Need for the Zero Emission Ship:

With expected fleet growth to meet world transport

demand for the next decades, CO2-emissions from

shipping will increase. Even if known and available

measures are implemented, shipping will likely not meet

the discussed emission targets. At the same time, fuel

prices will continue to increase with future oil reserves

being more remote and requiring advanced technology.

Therefore, it is time to consider novel solutions to enable

future zero-emission shipping. GL Strategic Research

and Development looks at novel technologies beyond

current applications. The presentation outlines a vision

for a zero-emission container feeder vessel, possibly

operating after 2025.

Solution: Hydrogen as fuel

Fuel cell systems using Hydrogen is the answer to all

the questions as it can deliver a zero-emission power

generation. The new container feeder vessel has fuel

cells & special tanks to hold liquid Hydrogen for a typical

round trip length in Northern Europe. The vessel would

be required to stop every 10 days at an offshore stationfor bunkering.

Overview of technical aspects of the Hydrogen-

fuelled container feeder vessel

The new container feeder vessel is set to target the

Northern European trades.

It is has a full open-top 1000 TEU intake with 150

reefer slots, 700 TEU @14t

Its service speed is 15 knots

It is driven by two podded propulsors and thruster for

maneuverability and redundancy The vessel will have zero CO2, SOX, NOX and PM

emissions

The new container feeder vessel runs on liquid

Hydrogen. It converges energy into two power genera-

tion rooms, forward and aft. It has 5 MW fuel cell

systems, with 3 MW battery systems to provide peak

power, multiple type C tanks with 920 cubic mt to hold

liquid Hydrogen for a ten-day round trip. The bunkering

time is estimated at 3 hours with two bunker stations.

The fuel for the vessel namely liquid Hydrogen is

produced on-site of an offshore wind-energy park.

Liquid Hydrogen offshore production potential:

In 2020, about 3GW is assumed being delivered from

offshore wind energy parks in North Sea area and the

German Exclusive Economic Zone (EEZ). Up to 30% of

the generated power may not be put into the grid and

could be available for Hydrogen production (up to 3600

GWh/a). A 500 MW wind farm may thus produce up to

10,000 tons of liquid Hydrogen (LH2) using its surplus

power. This could serve 5 feeder vessels. An interme-

diate storage of LH2 for up to 10 days requires insulated

tanks of up to 5000 cu mts. The costs for LH2 are based

on investment for production, liquefaction and storage.

Following diagram represents various costs of offshore

generated liquid hydrogen.



According to the above graph, it is realistic to assume

that LH2 will not be competitive compared with LNG

driven vessels. Cost is quite high but it could becomeanswer to our questions and could become commer-

cially viable too.

Installed power and liquid Hydrogen tank capacities

At design draft of 8m, the vessel will sai l with 15 knots

running on 4000 KW. Installed power of 5000 KWand an equivalent full ten-day operation, the amount

of Hydrogen needed is 920 cu mts with the fuel cell

system operating at 55% efficiency. Based on the study

At 4000 h/a production, we estimate a price of up to 7500$/t LH2. This includes production, liquefaction and storage

on-site.

Sources: GL Research, bunkerworld, apxgroup, x-rates, LBST wind hydrogen study

May 2011

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

2026

2027

2028

2029

2030

2

010$/mmB

TU

80

70

60

50

40

30

20

10

0

LNG Zeebrugge (w/o distribution)

LH2 North Sea (lower extimate)

Historic and predicted fuel prices

MGO Rotterdam (delivered)

LH2 North Sea (upper extimate)

Costs of offshore generated liquid Hydrogen

1.000 2.000 3.000 4.000 5.000

Full equivalent operating hours per year

= 1.35$

Source: Potenziale der Wind - Wasserstoff - technologie, LBST, April 2010

6.000 7.000 8.000

16.000

14.000

12.000

10.000

8.000

6.000

4.000

2.000

0

$/t

LH2


20/6020

for LNG-fuelled container feeder vessel in 2009, GLestimated that around 6% of the TEU capacity needs to

be sacrificed for the Hydrogen fuel tanks.

Investment for LH2-fuelled container feeder vessel

The LH2-fuelled container vessel has significant higher

investment costs than a traditional design of similar

size. Where an HFO fuelled vessel will require an invest-

ment of USD 22 mn, the hydrogen LH2-fuelled vesselrequired around USD 35 mn. This additional investment

is required mainly for the type-C tanks (37%), the fuel

cell systems (57%) and the battery system (6%).

Data from the 2009 LNG-fuelled feeder study and from

the GL market study on fuel cell systems were used as

principal source to estimate the costs.

MGO-fuelled LH2-fuelled

Fuel consumption 19, 38 5,56 t/day

Fuel price 2020* 40 65 $/mmBTU

1728 7800 $/t

Equiv. full op days 270 270 days/year

Annual fuel costs 9, 04 11,72 m$/year

Other costs 1,43 1,43 m$/year

Total capital required 25, 11 39, 51 m$

Lifetime 25 25 years

Interest 5,00% 5,00%

Annuity 1,7 8 2, 80 m$/year

Total costs 12, 25 15, 95 m$/year



According to Mr. Holgers, the LH-2 fuelled containervessel will be competitive only after 2020 when the

MGO prices are expected to rise steeply due to high

demand. At that time Hydrogen Fuel can be considered

to be a lucrative fuel option. The following graph shows

chart for the same:

Mr. Holgers concluded the presentation by creating avision for a zero-emission container feeder vessel. A set

of fuel cell systems, batteries & pressurized tanks facili-

tate a ten-day round trip at 15 knots. Investment costs

for the LH2-fuelled container feeder vessel are about30% higher. The vessel will run on liquid Hydrogen

produced by offshore wind farms. The cost of offshore-

produced LH2 could match MGO-levels (compared by

energy content) after 2020 at current LH2 production

cost estimates. The LH2-fuelled vessel may become an

economically attractive alternative when MGO pricesincrease beyond 2.000 $/t.

The presentation ended.

1816

14

1210

8646

20

LH2-fuelled (lower estimate)

Annual cost for container feeder vessel

LH2-fuelled (upper estimate)MGO-fuelled

MGO historic high:1319 $/t, June 2008

500 1000 1500

$/t MGO

2000 2500

m$


22/6022


23/60


24/6024

Ship Recycling by Mr. Pravin Nagerseth

Mr. Pravin Nagarseth President, Iron & Steel Scrap

& Ship Breakers Association

About Mr. Nagarseth

Mr. Pravin Nagerseth continues as President of Iron

Steel Scrap & Ship breakers Association of India since

1991. He is in ship breaking and steel scrap activity

since 1965. He represents the Association in India on

various Committees including Ferrous Scrap Committee

under Steel Ministry. He had presented papers at various

International seminars and workshops. He was elected

as the Chairman of the Federation of Ship recyclers

Association of the three countries (Bangladesh, Pakistan

and India) for the first year.


Mr. Nagarseth introduced the conference to some main

issues and presented some perspectives on benefits,

environment and regulations for the ship recycling

operations. In his words, Ship recycling is the sameas Ship breaking as nearly 90% of the output of ship

breaking is either recycled or re-used

Ship Recycling is a must for ship owner as the ship loses

its commercial life in about 25 years. The only eco-

friendly way to replace the ship is by recycling it in the

shipbreaking yards. Around 4% of world fleet has to

get recycled every year.

Ship recycling is an ecofriendly and time saving method

of shipbreaking. It saves four times nonrenewable

natural resources like iron ore, coal etc. and generatesalmost no solid waste.

Not only is it environment oriented, but also helps in

generating employment to workers. Production of 1

ton of steel from ship breaking provides employment

of 4 man days. It saves energy as it does not require

electric power or water in its processes. The land

required for total yard is about 100 acres only. A mere

capital investment of Rs. 150 crore can produce about

4 million tonnes of steel. Even the Supreme Court has

taken a strong stand to enforce environment friendly

mining leading to closure of number of mines. Import

of coking coal has become expensive and thus imports

of steel scrap in form of ships for demolition should

be encouraged.

The ship recycling industry supplies substantial quantity

of re-rollable and steel melting scrap for scrap based

re-rolling mill and induction and arc furnace. It is viable

where scrap based re-rolling mills are operative.

More than 90% of the ship recycling in the world is

taking place in India, Bangladesh, Pakistan, China and

Turkey

Ship recycling conversion from ship to scrap costs about

Rs. 3,000/ton. Direct rolling of re-rollable scrap saves

one process of melting and thus helps the industry to

increase the availability of such semi-finished material

India is one of the leading ship breaking countries in

the world. Although it had lost its premier position to

Bangladesh during the last few years, in the current

year it has again recaptured the premier position in ship

breaking.

Mr. Nagarseth further briefed about some national and

international regulations affecting ship breaking industryand also pointed out the unnecessary involvement

of IMO into making guidelines for areas not covered

under its jurisdiction. He also pointed out instances of

regulations set by the European Union which were not

successful in some countries.

Owing to time deficit, Mr. Nagarseth quickly summed up

his extensive presentation by talking about the future of

shipbreaking in India and once again handed over the

floor to the session chairman.

Environmentally sound and sustainable ShipRecycling by Mr. Dilip Mehrotra

Mr. Dilip Mehrotra,Deputy Chief Surveyor cum

Senior Deputy DG(Tech),Directorate General of

Shipping

About Mr. Mehrotra

Mr. Dilip holds Mechanical Degree from Regional

Enginering College, Rourkela and M.Sc. Degree in

Maritime Safety Environment Protection from World

Maritime University, Malmo, Sweden. He is currently

working as Dy. Chief Surveyor at the DG Shipping,

Mumbai. He is a qualified lead auditor for International

safety Management audits. He has presented papers at

various regional seminars as a representative from India.




Mr. Dilip thanked the chairman and reflected his

memories of the MEPC convention wherein the previous

speaker Mr. Nagarseth had contributed much to the

ship recycling convention. India played a major role in

the MEPC convention preparation.

Mr. Dilip informed the delegates that the main countries

in ship recycling are Pakistan, Bangladesh, China &

Turkey. During his visit to ship recycling facilities in China

and Turkey he noticed that the Indian facilities at Alang

were at par with those in China and Turkey. The only

difference being the need for improvement in labour

conditions in Alang.

As known by many, there are various methods of ship

recycling the primary being (i) Tidal Beaching Method:

as practiced in Bangladesh, India, and Pakistan, provides

65% or more of the worlds recycling capacity in GT

terms, (ii) Non Tidal beaching Method: as practiced

in Turkey, provides about 2% of the worlds capacity,(iii) Alongside : as practiced in China, provides around

31% of the worlds capacity and (iv) Graving dock or

dry-dock: used in very limited cases.

International Maritime Organization plays an important

role in the development, promotion and regulation of

the shipping industry as a whole. A convention called

the Hong Kong Convention or HKC was passed at one

of the diplomatic conferences held at Hong Kong,

China. Mr. Dilip explained briefly the process followed by

the IMO for passing of any convention and then high-

lighted the main points of the HKC convention.

The HKC Convention is also called Convention on Safe

and Environmentally Sound Recycling of Ships and is

applicable to Ship Yards & Manufacturers, Owners /

Operators of: (i) Newbuilds > 500GT, (ii) Existing Ships

> 500GT, (iii) New installations on ships > 500GT, (iv)

Ship recycling facilities India played a major role in the

conference by contributing paper on bleaching. In the

words of Ex-Secy General IMO If India was not there,

the conference would have been a flop

Mr. Dilip explained the structure of the conven-

tion and its salient features. The overall structure of

the HKC / International Convention for the Safe and

Environmentally Sound Recycling of Ships can be seen

below:

The structure of the convention includes:

21 Articles, establishing the main legal mechanisms

25 regulations, containing technical requirements,

divided in four chapters:

General (regulations 1-3)

Requirements for ships (regulations 4-14)

Requirements for ship recycling facilities (regula-

tions 15-23)

Reporting requirements (regulations 24-25)

7 appendices, with lists of Hazardous Materials, formsfor certificates etc.

Separately, 6 non-mandatory guidelines are currently

being developed providing clarifications, interpreta-

tions, and uniform procedures for technical issues

arising from the provisions of the Convention.

Following table summarises the schedule for develop-

ment of the guidelines associated with the HKC

Preamble

Articles

"establish the main legal mechanisms"Explicit amendment procedure

Tacit amendment

procedure

Guidelines - "mainly procedures to assist the requirements"

Regulations- "contains techinical requirements"

Chapter 1 Chapter 2 Chapter 3 Chapter 4

Appendices- "contains forms for certificates etc"


26/6026

Mr. Dilip quickly summarized the session by listing out

some critiques against the convention and briefing

about Indian contribution to the recycling industry.

Coastal Shipping A growth driver for India by

Sarvesh K. Shahi

Mr. S. K. Shahi - CMD, SKS (Ship) Ltd

About Mr. ShahiMr. Sarvesh Kumar Shahi has trained in Training Ship

Rajendra as cadet officer. In 1985, he ventured into

the shipping business with one vessel as a partnership

company which went on to grow and now has more

than 30 vessels operating in India for various lighterage

operations for bulk cargo, POL products etc. He has

presented papers at various national and international

conferences. He has served as a Member of the National

Shipping Board of India. He is the Director of Indian

National Ship Owners Association.


There have not been many changes in the coastal

shipping regime except the various taxes added for

operations of coastal vessels and the more and more

preference for large carriers over coastal ships as the

former can offer more revenues.

The beginning of Indian Maritime industry can be traced

back to 3000 years but the modern maritime industry

began in 1840 with the establishment of Bombay

Steam Navigation Company. The other notable steamers

were the Tata Line in 1894, the Swadesh Company in

1906, the Bengal Steamship Company in 1907 andthe Scindia Steam Navigation Company in 1919. After

giving a statistics on the Indian coastal vessels and

Gross Tonnage he highlighted various positive points

of Coastal shipping including the current proportion of

cargo transport through various means of transport,

the cost savings by coastal shipping and the benefits on

environment due to reduction of emissions and other

factors found only in coastal shipping.

While he emphasized the fact that the optimal mix

of coastal shipping, inland water transport, road and

rail will provide an efficient transport infrastructure

with mobility, flexibility and cost efficiency, in his

view adequate investments have not been made for

developing coastal shipping as compared to the other

MEPC Session: MEPC 59 MEPC 60 MEPC 61 MEPC 62 MEPC 63 MEPC 64

Date (for 2012 the dates are tentative): July 2009 March 2010 Sept-Oct 2010 July 2011 March 2012 October 2012

Guidelines for the development of the Inventory of

Hazardous Materials (Inventory Guidelines)

Guidelines for safe and environmentally sound shiprecycl ing (FacilityGuidel ines)

Guidelines for the development of the ShipRecycling Plan (SRP Guidelines)

Guidelines for the authorization of ShipRecycling Facilities (Authorization Guidelines)

Guidelines for survey and certification

Guidelines for inspection of ships

AdoptedMEPC.179(59)

RevisedMEPC.197(62)

Planned adoption

AdoptedMEPC.196(62)

Planned adoption

Develop and then refer to FSI 20(end March 2012) (or FSI 21?)

Adoption?

Develop and then refer to FSI 20(end March 2012) (or FSI 21?)

Adoption?



transport infrastructure. Lack of policy measures,

unfriendly attitude of major ports towards the coastal

ships and lack of dedicated ports / jetties for coastal

operations are the primary reasons for the lack of

domestic cargo movement.

Mr. Shahi presented the views of the coastal shipping

companies and ship owners & listed their expectations

& support required from the government. Following

section enlists a few of them:

Construction of exclusive 200 mts long coastal jetty in

each and every major port outside the EXIM area free

of custom formalities, DLB etc. facilitated with modern

equipments to handle containers & heavy cargo

Second preference to coastal vessels in berthing facili-

ties and tariff charges as per tariff guidelines

Developing financial institutions to fund coastal

shipping vessels and operations

Understanding and granting difference between the

repair charges for foreign going vessels and coastalvessels and availability of dry dock for repairs

To evolve a case for providing tax concessions both

for fuels, spares and import of vessels as already the

coastal ships pay a lot of tax.

Building a separate cadre of sea farers for coastal

shipping with qualifications different from those

for ocean going vessels as the lack of availability

of qualified officers who prefer going on foreign

vessels has caused a concern in the coastal shipping

companies

In the Union budget 2005, Tonnage Tax has not been

forwarded to coastal ships. This acts as a further disin-

centive for investment in coastal tonnage. Tonnage

Tax should also be extended to coastal fleet.

If the income tax benefits are extended to the

seafarers, manning coastal vessels, it will attract good

offices & sailors.

Industries situated within 50 kms of sea should be

mandated to use coastal vessels or at least 10% of

cargo produced by the industries

Formulation of separate coastal tariff should be done

in order to reduce the handling cost of cargo

Reduction in the survey fees, vessel survey inmaximum 2 visits by surveyor

Availability of long term funding of 25 years with 90%

LTV at the rate of 6% interest

Availability of bunker on credit and berth at arrival,

port dues not to exceed 50% of freight and a

welcome attitude by ports and port officials towards

coastal vessels will go a long way in assisting the

development of coastal shipping

Possible policy initiatives which can be given to

encourage the coastal shipping were also presented in

the conference some of which are already discussed

above and others are mentioned below:

Strict implementation of CABOTAGE Laws.

Exempt Custom Duty on import of coastal vessels,

spares & bunker fuels

Design specifications for Coastal Vessel.

To improve connectivity between ports and the road/

rail network

One Time Service Tax for coastal operations.

Increase in Marine Training Colleges with affordable

fees.

Mr. Shahi expressed his trust that the Government

appreciated the role played by coastal shipping in the

movement of cargoes and will through promotion and

development of coastal shipping ensure the smooth

flow of cargo to the hinterland of India.

Role of Shipping in LNG Transportation by Capt.

B. B. Sinha

Capt. B.B. Sinha Senior Vice President, (Specialized

Vessel Cell), The Shipping Corporation of India

About Capt. Sinha

Capt. Sinha is a Senior VP with the SCI. After passing

out of training ship Rajendra in 1976, he joined SCI

as a Cadet where he rose to the rank of Master &

commanded various types of ships. He made the

transition from sea to shore in 1994 joining SCIs head

Quarters at Mumbai as a Marine Superintendent. He

has wide & varied experience in break bulk, container,

offshore, bulk, gas & chemical tanker shipping both in

technical and commercial operations.

He was SCIs representative in USA and has represented

SCI on various trade bodies and committees. Presently

he is working as a Senior V.P. in Bulk & tanker division

of SCI looking after Bulk & specialized vessel cell. He has

been associated with LNG business of SCI since 2008.


28/6028


Captain Sinha gave an excellent presentation on the

technical aspects of LNG transport in a very crisp and

simple manner. The key points of the presentation

were focused on the introduction of the concept of

LNG transportation to the delegates present in the

conference.

LNG is a gas which when in liquid state is 1/600 thof the

volume of its equivalent gaseous state at atmospheric

pressure and ambient temperature. The transportation

of LNG on ships is when it is near its boiling point. Other

properties of LNG are (i) nil solubility in water (ii) high

dielectric power (iii) low conduction of electricity (iv)

Nontoxic, colorless & odorless.

There are some risks associated with LNG like the

damage caused to the living tissue if it comes in contact

with LNG, metals lose their ductility and causes brittle

fracture of many materials. Due to these risks, the

construction of LNG ships is done by using the metalsand technology suitable to LNG, which also becomes

the cause for the increase in cost.

Due to the growing demand of natural gas in India the

LNG as a fuel is going to rise.

Capt. Sinha further explained the LNG value chain and

gave details on the types of ships used for LNG transpor-

tation namely (i) Moss Type (II) Membrane type.

The journey of LNG transport dates back to 1917 where

it first began in West Virginia in USA, followed by 1959

in UK. The typical commercial characteristics of LNG

shipping industry are:

Conservatism, strong tendency to favour ship owning

companies established in LNG shipping, politics, nation-

ality of shipping company and flag state, custom built

specifications for customers who take them on 20-25

years charter and absence of pools / associations for

LNG transportation.

LNG shipping is a very capital intensive segment wherein

the standard ship costs approximately USD 220 million.

Typically the vessel is built on long term charter for

specific requirements due to which its revenues are fixed

in advance for a long period of time while the operating

expenses vary from time to time. Thus creating a

negative case for the LNG transport business.

Currently globally around 362 ships carry the role of

LNG transporters out of which almost 36% are Moss

type, 61.4% are Membrane Type and 2.6% are inde-

pendent (IHI & CSI). This fleet is projected to go up to

408 ships by the year 2014.

There are many factors driving LNG ship charter rates

such as ship price, yard availability, standard specifica-

tion, financing rate achieved based on project merits,

promoters financial standing & experience, international

financial market conditions, importing countrys rating,

ship size, type of propulsion & containment etc.

The future of LNG shipping is seen to be dynamic. New

LNG Ships are being ordered, ship owners confirming

advance bookings of LNG ship charters for long term

contracts where they carry only the residual value / scrap

Moss type Membrane type



value risk, & 20 year old vessels becoming available for

short term trades are some of the indicators.

Capt. Sinha further explained the future developments in

the LNG shipping such as FSRUs, On-board regasification

units and Floating LNG units and their advantages and

operational specifications.

He then spoke about the foray of SCI in LNG Shipping.

SCI has entered in this segment in 2001 along by

forming a consortium with other partner firms in this

segment. SCI currently owns and manages 3 LNG

carriers from Qatar to India on long-term charter of 25

years to Petronet LNG Limited.

SCI visualizes being a major player in the field of energy

transportation by sea. It intends to participate in the

upcoming Kochi project and plans to enter into strategic

alliance in all the future LNG projects coming up on the

Indian Coast.

Capt. Sinha concluded the session by mentioning of

SCIs future plans.

Shipping Finance by Mr. Sudipan Bhaduri

Mr. Sudipan Bhaduri, Senior Advisor (Finance), SKIL

Infrastructure Ltd., Mumbai

About Sudipan Bhaduri

Prior to joining SKIL Infrastructure, Mr. Bhaduri worked

as a General Manager at State Bank of India. He has

worked in various important assignments in CorporateAccounts Group and Mid Corporate Group for 12 years

in SBI. He has a vast experience of exposure in shipping

and shipyard functioning. Mr. Bhaduri headed the

Overseas Branch of SBI for 3 years which has the only

Shipping Division of SBI.


Shipping finance by the virtue of being a singular topic

was one of the most sought after topic by the confer-

ence attendees. Mr. Sudipan gave a simple and lucid

explanation of the various facets of shipping finance

and various sources from which the finances could be

obtained. He also recommended the way forward for

the industry, banks and financial institutions to start

considering financing of shipping as a viable and profit-

able business venture. The gist of the presentation made

by Mr. Sudipan is outlined below.

The basic characteristics associated with the

shipping industry are:

Capital intensive facing volatility in market,

Cyclical in nature

Contains provision of international services and

thereby the involvement of currencies other than the

domestic currency.

As far as India is concerned the options available for the

Indian Shipping industry are:

1. Equity Finance: Owners equity and IPOs till now

hardly 10 shipping sector companies have been able

to access this mode and through IPOs

2. Mezzanine Financing: Private Placement Currently

no public banks provide finance through this mode.

The players open for funding the shipping companies

by this mode are private parties3. Senior Debt: Bonds, Commercial Banks, Loans, Infra

Debt funds

4. Lease: Financial and operating lease

Mr. Sudipan highlighted that the shipping companies

depend on the traditional approach of debt finance for

raising funds. Usual modes like External Commercial

Borrowings, Foreign Currency Loans, Rupee Term

Loans Letters of credit etc. are backed by collaterals,

mortgages, assignment of income and insurance and

personal guarantees.

Shipping companies look for funding where they have:

Low equity contribution and high return on

investment

Minimum collateral against loans / debts

Maximum loan period to match life of assets, balloon

and bullet terms

Cheap finance by the way of low interest rates

Fast response time to loan applications, advises on

better source and newer financial products tailored to

match their needs

Minimum documentation to avoid loss of time

The obvious mismatch between the lender-borrowers

expectations from each other is the root cause for the

high cost finance available to shipping companies.


30/6030



Some other problems associated with ship finance

include:

Lack of expertise with Indian banks to assess shipping

projects

Finance is made during boom period leading to over

supply

Financing is made without time chartered contracts

This breaks link between Demand & Supply

No system of forecasting shipping cycles in banks

appraisals. Banks generally dont give loans beyond 8

years

Shipping sector is not given infrastructure status

Prohibits long term financers and take out finance

No secondary market for institutional investors,

insurance companies and pension funds

After explaining the challenges faced by the shipping

industry for raising finance and the reasons for such

phenomenon, Mr. Sudipan laid some steps to dissolve

the differences so as to address the shipping finance in amore organized way.

Following are some of the suggested steps:

Sophisticated products Securitization, Credit

Derivatives should be innovated which can cater

specifically to shipping needs

Venture Capital funds should take interest in the prof-

itable business of shipping

Maritime joint ventures should be made between

various banks and insurance companies to facilitate

the financing of maritime projects and ship finance

Adoption of Mezzanine Finance by the institutions andshipping companies

Shipping Sector be accorded infrastructure status

Develop Secondary Market for such debt instruments

and loans so that it attracts the private players due to

easier liquidity

Banks should go for more syndication of loans to

reduce risk

Mr. Sudipan closed the session with a positive outlook

towards shipping finance.


32/6032

Session 3: Panel Discussion:Wither Indian Shipping for the

next decadeSession Chairman:

Mr. A. Banerjee, Chief Surveyor, Directorate General

of Shipping

The panel discussion was proposed for the topic Wither

Indian Shipping for the Next Decade. The panelists

included Mr. A. Banerjee, Mr. Dilip Mehrotra, Mr I.N.

Bose, Mr. Soli Engineer & Mr. J.N. Das. The panelists

presented their views in a short span of 2-3 minutes

each and then the floor was opened to questions and

answers.

The observations of Retd. Commander Pirman, Officer

from Navy, and currently the HOD, Naval Architecture

at University at Chennai on the lack of R&D efforts

in shipping industry and absence of any government

body or NGO for monitoring the efforts made in these

directions was commended by the session Chairman

Mr. Banerjee. The Commander was invited to the D.G.

Shipping to work on assignments & volunteer the efforts

to track them.

Introduction to the panelists:

Mr. A. Banerjee: Chief Surveyor, Directorate General

of Shipping

Mr. Banerjee is an Extra First Class in Engineering

Certificate of competency (Motors) and M.Sc from

Malamo, Sweden. Mr. Banerjee has been in Directorate

General of Shipping since 2009. He has been associated

with IMO for many projects.

Mr. Dilip Mehrotra: Deputy Chief Surveyor cum

Senior Deputy DG (Tech), Directorate General of

Shipping

Mr. Dilip holds Mechanical Degree from Regional

Enginering College, Rourkela and M.Sc. Degree in

Maritime Safety Environment Protection from World

Maritime University, Malmo, Sweden. He is currently

working as Dy. Chief Surveyor at the DG Shipping,

Mumbai. He is a qualified lead auditor for International

safety Management audits. He has presented papers at

various regional seminars as a representative from India.

Mr. J.N. Das, Director, The Shipping Corporation of

India Limited

Jnanendra Nath Das is Former Member of the Board

of Directors at SCI-Forbes Ltd. and was on the Board

of Directors of the Standard Steamship Owners and

Indemnity Association (Bermuda) Ltd. Mr. Das joined SCI

after graduating from DMET. He worked as Technical

Manager & Assistant General Manager in Bulk Carrier

& Tanker Division. Thereafter, grew up the hierarchy

across the organization and was appointed as General

Manager in Bulk Carrier (Tech) Dept. and later General

Manager (SVC) consisting of LPG, LNG and Chemical

Tankers

Mr. Soli Engineer, Executive Director, Great Offshore

Limited

Mr. Soli Engineer has four decades of experience in the

shipping and offshore sectors. He is associated with the

offshore sector, ever since the time of conceptualization

of the offshore oil field services business in 1978, under

the auspices of The Great Eastern Shipping Co. Ltd.

In 2009 was appointed as Executive Director at Great

Offshore Limited

Mr. Indra Nath Bose, GM (Quality, Safety & Training),

the Great Eastern Shipping Co. Ltd.

Mr. I.N. Bose is a member of the governing board and

Chairman of the Academic Council of Great Eastern

Institute of Maritime Studies. He has been representing

India at Marine Environment Protection Committee

(MEPC) and Diplomatic Conferences of International

Maritime Organization for more than a decade. He

has been closely associated with the development of

measures for reduction of Green House Gas from shipsat national and international levels as INSA representa-

tive. He was a member of the Market Based Measures

Expert Group of IMO

Discussion:

The format of the discussion was that each of the

panelists would speak on the topic one by one and

would be supplemented by a quick question answer

session. During the discussions a variety of interesting

facts and experiences were shared by the experts.

The suggestions and discussions ranged from competi-

tive pricing of global ships, high bunker fuel costs, IMO

coming down with regulations on sulfur w.r.t. fuels, the

challenges for containers trade in India due to non-

operations of big size ships having container capacity of

18000 TEUs along the Indian Ports.



The debate about Cabotage being good or bad was

still carried on in this session and Mr. J. N. Das voiced

his support to the implementation of Cabotage Policy.

According to him if Cabotage was that bad a rule then

why would the USA, UK, China still persist with it. The

Cabotage is a tool by which a country can secure its

trade & cargo for its own shipping industry and prevent

it from being carried away by foreign flagged ships.Insurance and re-insurance business needs to flourish

in order to make Indian Shipping competitive and to

acquire financing at competitive costs.

The shipyards that have now focused on Shipbuilding

should shift their focus on ship repairs too. Already

excess supply of ships causes problems due to which the

new ships business may take a turn. Ship repairs on the

other hand are required for every existing and running

ship and after almost every voyage. It has much larger

potential than other areas like shipbuilding.

Government should take interest in advancing soft

term loans to shipping companies in India. It should

follow the model of DBS bank in Shanghai, China which

promoted the shipping operations.

Competitive pricing of charters is also affected by the

differences in safe manning levels of Indian and Foreign

ships. While the foreign ships have safe manning level

of 7 persons, the Indian ships have manning level of

14 persons which increases the cost substantially. This

should be reconsidered by the Ministry and the industry.

A need for building LNG Bunker fuel terminals all over

the coast of India may be witnessed owning to thedirection of the choice of fuel. Managing costs of opera-

tions of ships is an important challenge faced by the

shipping industry and the plethora of regulations lined

up will only add to the costs of operations. Regulations

for low sulfur fuel, ballast water treatment, bunkering

operations, electronic chart display etc. will have a

profound impact on the way shipping industry

operates today.

Thus the panel discussions ended with a note on the

way forward and the topics of concern for the shipping

industry. It listed out various issues to be considered by

various sections of the industry to make Indian shipping

successful in the coming turbulent times.


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Day 2



Session 3: IndigenousShipbuilding & Naval

ConstructionDevelopments in Design of Dry Docks for Ship

Repair & Shipbuilding

Speaker: Gary Courtnadge - Director, Shipyard

Advisory Group, Royal Haskoning, UK

About Mr. Gary Courtnadge:

Gary Courtnadge is a chartered civil engineer with over

30 years of experience in civil and structural engineering,

particularly in managing the shipyard procurement

and construction process for clients. He has worked

extensively on maritime projects throughout the UK and

overseas. He has worked extensively on naval base and

dockyard facilities, working on numerous projects for

the UK Ministry of Defence.


The presentation focused on advances in design which

are now being applied in new and existing yards to

reduce capital cost and improve efficiency. Examples

of proven innovations were also provided. Summary of

topics discussed are listed as follows:

Dry Dock Construction

Mr. Courtnadge explained that the size and depth of

dry docks is continually increasing. The typical length is

400m; widths are 66m, 80m and 125m; and depth is up

to 16m. The cost of a dry dock depends on its size, site

conditions, form of construction and extent of marine

construction. There are 3 types of graving docks:

Gravity Docks

Anchored Docks

Drained Docks

Dock floors are bearing either on the ground or on piles.

Dock walls are constructed using:

steel sheet piling

mass concrete

reinforced concrete constructed in the dry

concrete caissons placed in the wet

diaphragm wall construction

There are three different types of dry dock

constructions to counteract hydrostatic uplift:

Gravity docks

Designed using weight of floor/walls, traditionally

used for small docks or naval docks comprising

altars

High cost due to large concrete quantities

Anchored docks

Dock floor held down by ground anchors or

tension piles

Can be costly

Anchors and piles have been known to fail due to

corrosion

Drained docks

Where there is low ground permeability, use

sub-floor drainage system, usually with cut-offs

Porous concrete layer and collector drains,

connected to pump house

Pumps remove seepage water to relieve uplift

pressure

Pressure relief system also installed

Dock gates

Dock gates are designed to suit the purpose and size

of the dock. Gates are traditionally designed to span

or arch across dock entrances. But wide docks make

spanning difficult. For very wide entrances, gates are

designed to stand by weight, cantilever or propping.

Types of dock gates

Floating

Caisson gates

Hinged

Mitre gates

Flap gates

Sliding

Dock and Lock Entrances Lift Out

Modular design

Several developments and innovations in Dry Dock

Design were discussed in areas such as:

Gravity Dock Gate

Pump Syphonic Discharge

Use Of Submersible Pumps For Dock Dewatering

Contaminated Water Removal

Dock Flooding Valves

Dock Entrance Silt Jetting

Removable Dock Blocks

Open Trunnion Hinge for Flap Gates

Gate Meeting Face Material


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Implications of the NATO Naval Ship Code

Speaker: R Simpson, Lloyds Register


Mr. Simpson began the presentation by describing

the limitations of Commercial Ship Safety Regulation

for Naval vessels and the justification for having a

Naval Specific Safety Regulation. The history of the

ANEP 77 NATO Naval Ship Code was discussed. The

speaker elaborated upon the challenges of Goal Based

Safety Regulation- such as the various perspectives

to be considered even for defining the word Safe.

He talked about how prescriptive standards are often

seen as constraining innovation. The Vee Model of

Naval procurement was discussed followed by role

and function of naval authorities and the challenges

faced by stakeholders. The differences in Contracting

Arrangements between Commercial practice and Naval

practice were brought to light.

The key points brought out in the presentation are asfollows:

The Naval Ship Code provides a mechanism for navies

to demonstrate: effective safety management system,

compliance (AFARP) with international conventions

(safety and environmental); and preserves a navys

exemption to deliver military effect.

Shipbuilders/ ship repairers and supply chain interme-

diaries need to understand the role of classification in

commercial shipping.

Naval authorities have significant responsibilities to

facilitate the adoption of the Code. Adoption ofcommercial standards in naval operations requires

deepening and widening of internal expertise. The

role of standards is also to act as repository of lessons

learned.

Ship repair Industry Challenges

Speaker: Mangala P. B. Yapa, Managing Director/

Chief Executive Officer, Colombo Dockyard PLC.


Mr. Yapa discussed the characteristics of the ship repair

industry, key criteria which define a good ship yardand the key challenges faced by the industry. They are

elaborated as under:

The characteristics of the ship repair industry are:

Capital Intensive

Large Infrastructure is needed for dry/floating

docks, cranes, workshops, equipment for large

volumes of work.

Labour Intensive since wide range of competen-

cies are needed along with high-level of tacit

knowledge

Technology which needs consistent updating &

ability to manage in a wide-spectrum

Heightened demand for logistics

Systemic approach - QMS, HES

Waste management - IMO, SOLAS and local

regulations

High working capital requirements

Cyclical in nature

The criteria of a Good Shipyard are:

Zero tolerance to Safety and Quality Deficiencies

Commitment to consistent Productivity Improvement Transforming to a Learning and Knowledge

Organisation

Demonstrate Professionalism and avoid corruption

Give Value for Money

Long-term Partnership vis a vis short-term price gains

The key challenges faced by the ship repair industry are:

How to adjust during Boom and Dips is the biggest

challenge!

CAPEX for expansion & ROI is a huge challenge

Labour How to adjust?

Subcontracting? How about Quality, HES? Permanent employees where to get trained

employees?

How to attract young blood to the industry

Salaries: cannot be adjusted according to volume!

Unfair practices

Poaching of performing employees

Unethical behaviours of people with responsibility

Price wars, Undercutting

Collusion between Yards and Responsible Officers

at the other end

Risk Management

High value assets of customers are being repaired &

any damage would result in heavy compensation.

Complex ships: performance needs to be

guaranteed.


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Heavy OPEX Requirements

Credit and Debt Management

Claims Management

Need to work/understand a wide range of customers-

from very large fleet owners to small timers

Developments in Naval Ship Construction

Company: Cmde. K. Subramaniam Chairman &

MD, Cochin Shipyard Limited (CSL).


The existing defense ship yards in India are MDL, GRSE,

GSL and HSL. However the global recession in commer-

cial shipping has now forced all the commercial yards

(like CSL, ABG, Bharti, L&T, Pipavav, etc.) to also look

at Defense orders. Cmde. Subramaniams presentation

tracked the Naval ship construction processes at CSL in

the following three phases:

a) CSL Pre 2000 Phase

From Inception till early 2000 CSL was only building

large merchant vessels (Bulk Carriers/ Tankers) - only 1 or

2 vessels per type. The Building cycle was long, marked

with low efficiency and high costs, as compared to

competitors in Japan/ Korea.

The major factors responsible for the delay were:

Design with Generic equipment

Procurement not focused/ more procedural

Detailed design/ engineering which can effectively

start only after procurement finalization Planning which goes out of control because of

design/ equipment delays/ lack of equipment info

b) CSL Transition Phase

Main equipment was finalized concurrent with

Shipbuilding contracts. CSL targeted medium size vessels

and hence was able to produce larger numbers of ships.

The detailed engineering time reduced drastically due to

the following:

Packaging of equipment from specialist vendors

Outsourcing part detailed engineering

Availability of binding data early in the project

Equipment procurement focused on project time

frames

Thus planning could be done much better and it

resulted in all round feel good factor which also

improved morale in the construction phase. CSL

delivered a 6 Vessel series ahead of schedule thus

earning a bonus. Howeve

smp expo-post summit report

Documents